A company has a convertible bond with a conversion price of $27 per share.The company's common stock is currently trading at $23 per share.What is the conversion value of the bond? (round to whole dollars).

Question

Quizplus · Accepted Answer

The conversion value of the bond is the number of shares that can be purchased with the bond's proceeds. In this case, the conversion price is $27 per share, and the common stock is currently trading at $23 per share. Therefore, the conversion value of the bond is $27 / $23 = 1.17 shares. Since the question asks to round to whole dollars, the conversion value is $1.17 * $1000 = $852.

A Company Has a Convertible Bond with a Conversion Price