Diamond Drill Inc. has 150,000 shares and 15,000 warrants outstanding. A warrant holder can purchase a new share of stock for five warrants and $5.00 per warrant. The stock is currently selling for $27 per share.
-Refer to the above scenario.The holder of a $1,000 face value bond can exchange the bond any time for 25 shares of stock.The conversion ratio is:

Question

Quizplus · Accepted Answer

The conversion ratio is the number of shares a bondholder can receive for converting a bond. Here, the bondholder can exchange a $1,000 bond for 25 shares, so the conversion ratio is 25.