Craig Supermarkets, Inc.has convertible debentures ($1,000 par value) that are callable at 108 percent of par value.The conversion price of the debenture is $40 per share, and the Craig common stock currently is selling at $55 a share.The company

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The conversion price is $40, meaning each debenture can be converted into 25 shares ($1,000/$40). Since the stock is trading at $55, the conversion value is $1,375 (25 shares x $55), which is higher than the call price of $1,080 (108% of $1,000). Therefore, calling the debentures would likely force conversion.