In: Economics
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
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.