If a convertible bond is quoted at 90 (par value = $1000) and has a conversion rate of 30, then the underlying stock should be trading at:

Name: If a convertible bond is quoted at 90 (par value = $1000) and has a conversion rate of 30, then the underlying stock should be trading at:
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Question

Quizplus · Accepted Answer

The conversion rate is 30, which means that each bond can be converted into 30 shares of stock. If the bond is quoted at 90, then the value of the underlying stock is 90/30 = $3.

If a Convertible Bond Is Quoted at 90 (Par Value