What happens in the case of a bond selling for $1,000 that can be converted to 20 shares of stock that are currently selling for $45 per share?
A) The bondholders will choose to convert.
B) The stock will go up to $50 per share.
C) The bond's price will go down to $900.
D)The bond price is unaffected by the stock price.

Question

Quizplus · Accepted Answer

Conversion value = 20 × $45 = $900; the stock price is not affecting the bond price.

What Happens in the Case of a Bond Selling for $1,000