Last year Jenny paid $1000 to purchase a convertible bond issued by the Megabux Corporation.The bond had a par value of $1000 and a conversion ratio of 20.When she bought the bond,the company's common stock was selling for $41 per share.Megabux's stock is now selling for $61 per share.This turn of events is likely to make Jenny very unhappy.

Question

Quizplus · Accepted Answer

Jenny is likely to be happy because the increase in Megabux's stock price from $41 to $61 makes the conversion option of the bond more valuable, allowing her to potentially convert the bond into shares at a profit.

Last Year Jenny Paid $1000 to Purchase a Convertible Bond