The holders of Xenron Corporation's bond with a face value of $1,000 can exchange that bond for 35 shares of stock. The stock is selling for $22.00.
-Refer to the above scenario.What is the conversion value of the bond?
A)$25
B)$40
C)$770
D)$1,000
E)No conversion premium is given.

Question

Quizplus · Accepted Answer

The conversion value is calculated by multiplying the number of shares received upon conversion by the current market price of the stock:
35 shares x $22.00 = $770
Therefore, the conversion value of the bond is $770.

The Holders of Xenron Corporation's Bond with a Face Value