SaundersThe following data apply to Saunders Corporation's convertible bonds: $\begin{array}{llll}
\text { Maturity: } & 10 & \text { Stock price: } & \$ 30.00 \
\text { Parvalue: } & \$ 1,000.00 & \text { Conversion price: } & \$ 35.00 \
\text { Annual coupon: } & 5.00 \% & \text { Straight-debt yield: } & 8.00 \%
\end{array}$
-Refer to Scenario: Saunders.What is the bond's conversion ratio?

Question

Quizplus · Accepted Answer

The conversion ratio is determined by dividing the par value of the bond by the conversion price. Therefore, the conversion ratio for the Saunders Corporation bond is:

Conversion ratio = Par value / Conversion price
Conversion ratio = $1,000 / $35
Conversion ratio = 28.57 (rounded to two decimal places)

Therefore, the correct answer is B) 28.57.

SaundersThe Following Data Apply to Saunders Corporation's Convertible Bonds -Refer to Scenario: Saunders