The holders of Mikayla Corporation's bond with a face value of $1,000 can exchange that bond for 30 shares of stock. The stock is selling for $25.00. What is the conversion price?
A) $25.00
B) $33.33
C) $35.00
D) $1,000.00
E) No conversion premium is given.

Question

Quizplus · Accepted Answer

The conversion price is the face value of the bond divided by the number of shares received upon conversion. In this case, the face value of the bond is $1,000 and the number of shares received upon conversion is 30. Therefore, the conversion price is $1,000/30 = $33.33.

The Holders of Mikayla Corporation's Bond with a Face Value