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 $80 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

Conversion value = 20 × $80 = $1,800; Bondholders will convert.

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