A firm has outstanding convertible preferred stock with a $50 par value which is convertible into three shares of common stock. The conversion value is $45. What is the current market price of a share of common stock?
A) $15.00
B) $16.67
C) $17.33
D) $20.00

Question

Quizplus · Accepted Answer

The conversion value of the preferred stock is given as $45, and it is convertible into 3 shares of common stock. To find the current market price of a share of common stock, divide the total conversion value by the number of shares into which it can be converted: $45 / 3 = $15.00.

A Firm Has Outstanding Convertible Preferred Stock with a $50