A convertible bond has a face value of $1,000 and a conversion price of $22.50. The bond has a 6 percent coupon and pays interest semi-annually. The bond matures in six years. Similar bonds are
Yielding 7 percent. The current price of the stock is $21.24. What is the conversion value of this
Bond?
A) $882.24
B) $944.00
C) $980.85
D) $1,010.08
E) $1,059.32

Question

Quizplus · Accepted Answer

The conversion value is calculated by dividing the bond's face value by the conversion price and then multiplying by the current stock price: ($1,000 / $22.50) * $21.24 = $944.00.

A Convertible Bond Has a Face Value of $1,000 and a Conversion