Assume that a convertible bond has a coupon rate of 10% and a face value of $1,000
and is convertible into 40 shares of the firm's stock. Assume it is also callable at face
plus one year's interest. The current market price of the stock is $30 a share. If the firm
were to call these bonds under this condition, would you accept the call or exchange
your bond for common equity? Explain.

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The Answer of Assume that a convertible bond has a coupon rate of 10% and a face value of $1,000
and is convertible into 40 shares of the firm's stock. Assume it is also callable at face
plus one year's interest. The current market price of the stock is $30 a share. If the firm
were to call these bonds under this condition, would you accept the call or exchange
your bond for common equity? Explain.

Assume That a Convertible Bond Has a Coupon Rate of 10