A firm issues the convertible debt shown above. The price of stock in this company on July 1, 2008 is $37.57. What is the minimum call price that would make a bondholder prefer to accept the call rather than convert?

Question

Quizplus · Accepted Answer

B) 286 × $37.57 = $10,745.02; Value over the face value = $10,745.02 - $10,000 = $745.02
percentage of face value = $745.02 / $10,000 = 7.5%

A Firm Issues the Convertible Debt Shown Above