You own six convertible bonds. These bonds have a 5 percent coupon, a $1,000 face value and mature in 8 years. The bonds are convertible into shares of common stock at a conversion price of $20. How many shares of stock will you receive if you convert all of your bonds?

Question

Quizplus · Accepted Answer

Each bond can be converted into $1,000 / $20 = 50 shares. Therefore, 6 bonds can be converted into 6 * 50 = 300 shares.

You Own Six Convertible Bonds