A company issued convertible bonds at $1,000 par value. Bondholders can exchange the bond for 25...

A company issued convertible bonds at $1,000 par value. Bondholders can exchange the bond for 25 shares of common stock at any time prior to maturity. What is the conversion price?

Expert Solution

Conversion Price = Face Value/COnversion ratio

Conversion Price= $1000/25

Conversion Price= $40

jeff jeffy answered 2 years ago

A company has an issue of convertible bonds with a $1,000 par value. The bonds have...

A company has an issue of convertible bonds with a $1,000 par value. The bonds have a 10% coupon rate, have a 10-year maturity, and are convertible into 100 shared of common stock. The yield to maturity on bonds of similar risk is 11% and the market price of the firm's common stock is currently $9.00. Based on this information: a) What is the conversation value of this bond if it is selling at $970? b) What is it's pure...

Andrus Inc. issued convertible bonds at their $1,000 par value 5 years ago The bonds currently...

Andrus Inc. issued convertible bonds at their $1,000 par value 5 years ago The bonds currently sell for $950. At any time prior to maturity on August 1, 2031, a debenture holder can exchange a bond for 25 shares of common stock. The current stock price is $30. What is the conversion price,? $33 $32 $38 $40 None of the above

Net income for the year $1,210,000 7% convertible bonds issued at par ($1,000 per bond); each...

Net income for the year $1,210,000 7% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 30 shares of common stock 2,000,000 6% convertible, cumulative preferred stock, $100 par value; each share is convertible into 3 shares of common stock 4,080,000 Common stock, $10 par value 6,130,000 Tax rate for 2021 20% Average market price of common stock $25 per share There were no changes during 2021 in the number of common shares, preferred shares,...

Fixzit had issued 7,200 convertible bonds at 121 on January 1, 2016. The $1,000 par value...

Fixzit had issued 7,200 convertible bonds at 121 on January 1, 2016. The $1,000 par value bonds carried an interest rate of 7% and had a 10-year term. Interest was to be paid by the company on June 30 and December 31. Attached with each bond were twenty detachable warrants, also issued. Each warrant entitled the holder to purchase one share from Fixzit at a price of $54. Further, each bond was convertible, at the option of the holder, into...

Company issued 10-year, 11 percent coupon bond with a par value of $1,000. The bonds may...

Company issued 10-year, 11 percent coupon bond with a par value of $1,000. The bonds may be called in 5 years at a call price of $1,150. The bond currently sells for $1,350. You are required to answer the following questions: a) What is the bond's yield to maturity? b) What is the bond's current yield? c) What is the bond's capital gain or loss yield? d) What is the bond's yield to call? e) If you bought this bond...

On January 1, 2011, Lin Company issued a convertible bond with a par value of $100,000...

On January 1, 2011, Lin Company issued a convertible bond with a par value of $100,000 in the market for $120,000. The bonds are convertible into 12,000 ordinary shares of $1 per share par value. The bond has a 5-year life and has a stated interest rate of 10% payable annually. The market interest rate for a similar non-convertible bond at January 1, 2011, is 8%. Required: a. Compute the liability component of the convertible bond on January 1, 2011...

A company issued $1,000 par value bond at 6% coupon rate. The bond will mature in...

A company issued $1,000 par value bond at 6% coupon rate. The bond will mature in 6 years. Current market yield for this bond is 7%. If the coupon is paid semi-annually, what would be the value of this bond? Group of answer choices $951.68 $682.29 $973.36 $952.33

QUESTION 5: A $1,000 par value bond was issued 25 years ago at a 12 percent...

QUESTION 5: A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar obligations are now 10 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,050. Further assume Ms. Bright paid 30 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the...

A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate....

A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar obligations are now 10 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,040. Further assume Ms. Bright paid 20 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to...

(a) Trump Limited has an outstanding issue of convertible bonds with $1,000 par value. These bonds...

(a) Trump Limited has an outstanding issue of convertible bonds with $1,000 par value. These bonds are convertible into 50 shares of Ali’s common stock. The convertible bonds have a 10% coupon with 10-year maturity. The yield-to-maturity for a straight bond of similar risk is 8%. i. Calculate the straight bond value of the convertible bond. ii. What is the conversion value of the convertible bond when the market price of Trump’s common stock is $30 per share? iii. If...

Question