Orient Airlines' common stock currently sells for $33,and its 8% convertible debentures (issued at par,or $1,000) sell for $850.Each debenture can be converted into 25 shares of common stock at any time before 2017.What is the conversion value of the bond?

Question

Quizplus · Accepted Answer

The conversion value of the bond is calculated by multiplying the current price of the stock by the number of shares each bond can be converted into. In this case, it's $33 per share times 25 shares, which equals $825.00.

Orient Airlines' Common Stock Currently Sells for $33,and Its 8