Earlier today, Alpha-Beta Inc. issued convertible bonds with $1000 par value and a conversion ratio of...

Earlier today, Alpha-Beta Inc. issued convertible bonds with $1000 par value and a conversion ratio of 20. What is the most likely market price for Alpha-Beta’s common stock currently?

a.Less than $50
b.Between $50 and $100
c.$50
d.More than $100

Solutions

Expert Solution

we have following information:
Convertible bonds par value = $1000

Conversion ration is 20 shares.

Market price = Par Value/ Conversion ratio
= 1000/ 20
=$50

Hence option C is the correct answer.

Rahul Sunny answered 1 year ago

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