You own five convertible bonds. These bonds have a 6 percent coupon, a $1,000 face value and mature in 9 years. The bonds are convertible into shares of common stock at a conversion price of $22.50. How many shares of stock will you receive if you convert all of your bonds?

Question

Quizplus · Accepted Answer

To find the number of shares received upon conversion, divide the bond's face value by the conversion price. For one bond, it's $1,000 / $22.50 = 44.44 shares. Since you have five bonds, multiply 44.44 by 5 to get 222.22 shares.

You Own Five Convertible Bonds