What is the conversion value of the bond?
A) $25
B) $770
C) $40
D) $1000

Question

Quizplus · Accepted Answer

To calculate the conversion value of a bond, you need to multiply the conversion ratio by the market price of the underlying stock. In this case, the conversion ratio is 25 (each bond can be converted into 25 shares of common stock) and the market price of the stock is $30.80. Therefore, the conversion value of the bond is 25 x $30.80 = $770. Option B is the correct answer because it matches the calculated conversion value.

What Is the Conversion Value of the Bond