The following data apply to Saunders Corporation's convertible bonds:
-What is the bond's conversion ratio?

Question

The following data apply to Saunders Corporation's convertible bonds: 
-What is the bond's conversion ratio?

Quizplus · Accepted Answer

The conversion ratio is the number of common shares the bondholder receives if they convert one bond. It is calculated by dividing the par value of the bond by the conversion price.

In this case, the bond's par value is $1,000 and the conversion price is $35. Therefore, the conversion ratio is:

Conversion ratio = $1,000 / $35 = 28.57

So the answer is B.

The Following Data Apply to Saunders Corporation's Convertible Bonds