What is the conversion ratio of a $1,000 bond convertible at $27 per share? The coupon rate is 10 percent and the market rate 12 percent.This company's common stock is currently trading at $23 per share.

Question

Quizplus · Accepted Answer

The conversion ratio is the number of shares that a bond can be converted into. It is calculated by dividing the face value of the bond by the conversion price. In this case, the face value of the bond is $1,000 and the conversion price is $27 per share. Therefore, the conversion ratio is 1,000 / 27 = 37.04 shares.

What Is the Conversion Ratio of a $1,000 Bond Convertible