Seagull Company has issued $100 par callable convertible preferred shares in which each share can be converted into 5 shares of Seagull Company common stock. The price of Seagull Company's common stock is $25 per share. The price of Seagull Company's preferred stock is $135. Seagull Company's preferred stock is callable at $110 per share. If Seagull Company is intending to call the preferred stock, should the investor accept the call price or should the investor convert the preferred shares into common shares?

Question

Quizplus · Accepted Answer

The Answer of Seagull Company has issued $100 par callable convertible preferred shares in which each share can be converted into 5 shares of Seagull Company common stock. The price of Seagull Company's common stock is $25 per share. The price of Seagull Company's preferred stock is $135. Seagull Company's preferred stock is callable at $110 per share. If Seagull Company is intending to call the preferred stock, should the investor accept the call price or should the investor convert the preferred shares into common shares?

Seagull Company Has Issued $100 Par Callable Convertible Preferred Shares