A convertible bond has a par value of $1,000 and a current market price of $850.The current price of the issuing firm's stock is $29 and the conversion ratio is 30 shares.The bond's market conversion value is ______.

Question

Quizplus · Accepted Answer

The bond’s market conversion value is the current price of the stock multiplied by the conversion ratio. 
Market conversion value = $29 x 30 = $870 
Therefore, the best choice is C) $870. The bond is currently trading below par value and the conversion value is higher than the market price of the bond, so it may be a good investment option for someone who thinks the stock price will rise in the future.

A Convertible Bond Has a Par Value of $1,000 and a Current