The holders of Xenron Corporation's bond with a face value of $1,000 can exchange that bond for 35 shares of stock. The stock is selling for $22.00. What is the conversion value of the bond?
A) $25
B) $770
C) $40
D) $1000

Question

Quizplus · Accepted Answer

The conversion value of the bond is calculated by multiplying the number of shares that the bond can be converted into by the current market price of the stock. Therefore, the conversion value is 35 shares * $22.00 = $770.

The Holders of Xenron Corporation's Bond with a Face Value