What will likely happen in the case of a bond selling for $1,000 which can be converted to 20 shares of stock that are currently selling for $55 per share?
A)the bondholder will lose $100.
B)the stock will go down to $50 per share.
C)the bond's price will go down to $900.
D)the bondholder will choose to convert.

Question

Quizplus · Accepted Answer

The bondholder will likely choose to convert the bond into 20 shares of stock, which would have a total value of $1,100 ($55 per share x 20 shares). This would result in a gain for the bondholder.

What Will Likely Happen in the Case of a Bond