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

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 2 years ago

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

A(n) 99% convertible bond carries a par value of $1,000 and a conversion ratio of 21....

A(n) 99% convertible bond carries a par value of $1,000 and a conversion ratio of 21. Assume that an investor has $5,000 to invest and that the convertible sells at a price of $1,000 (which includes a 26% conversion premium). How much total income (coupon plus capital gains) will this investment offer if, over the course of the next 12 months, the price of the stock moves to $87.58 per share and the convertible trades at a price that includes...

On January 15, 2012, TEX Consulting, Inc. issued some $1000 par value bonds. These bonds have...

On January 15, 2012, TEX Consulting, Inc. issued some $1000 par value bonds. These bonds have a coupon rate of 8.25% and the coupon payments are quarterly. On the original issue date, the bonds had 30 years to maturity and the original YTM on these bonds was 8.75%. Exactly one year after issue, these bonds traded at a price that resulted in a YTM of 6.25%. If you had bought one of these bonds on the issue date and sold...

Consider the following information regarding a convertible bond: Par value = $1,000 Conversion ratio = 30:1

Consider the following information regarding a convertible bond: Par value = $1,000 Conversion ratio = 30:1 Convertible bond price = $1,020 Given that the conversion premium is $30, the current share price is closest to: A. $30.00. B. $32.33. C. $33.00.Consider the following information regarding a convertible bond: Par value = $1,000 Conversion ratio = 30:1 Convertible bond price = $1,020 Given that the conversion premium is $30, the current share price is closest to: A. $30.00. B. $32.33. C. $33.00.

(Conversion of Bonds) Telta Inc. issued $15,000,000 of 12%, 40-year convertible bonds on November 1, 2017,...

(Conversion of Bonds) Telta Inc. issued $15,000,000 of 12%, 40-year convertible bonds on November 1, 2017, at 97 plus accrued interest. The bonds were dated July 1, 2017, with interest payable January 1 and July 1. Bond discount (premium) is amortized semiannually on a straight-line basis. On July 1, 2018, one-half of these bonds were converted into 60,000 shares of $1 par value common stock. Accrued interest was paid in cash at the time of conversion. Instructions: (a) Prepare the...

OBJ Inc. issued $1000 par value, 17-year bonds at a coupon rate of 10.8 percent. These...

OBJ Inc. issued $1000 par value, 17-year bonds at a coupon rate of 10.8 percent. These bonds were issued 2 years ago. These bonds currently sell for 97 percent of par value and make semiannual payments. What is the YTM?

Livewell, Inc. has convertible bonds. Use the following data to determine their conversion ratio. Maturity 20...

Livewell, Inc. has convertible bonds. Use the following data to determine their conversion ratio. Maturity 20 years, stock price $20, Par value $1,000, conversion price $25, Annual coupon 9%, straight debt yield 12%. Round to he nearest whole dollar.

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?

On January 1, 2020, Sro Company issued ten convertible bonds with a par value of $8,000...

On January 1, 2020, Sro Company issued ten convertible bonds with a par value of $8,000 per bond in market for $82,000 in total. Each bond is convertible into 800 ordinary shares of $3 per ordinary share par value. The bonds have a four-year life and a stated interest rate of 8% payable annually. The market interest rate for similar non-convertible bonds on January 1, 2020, is 9%. Q : Compute fair value of liability component and fair value of...

Sean Thornton has invested in a convertible bond issued by Cohn Enterprises The conversion ratio is...

Sean Thornton has invested in a convertible bond issued by Cohn Enterprises The conversion ratio is 20. The market price of Cohan common stock I $60 per share. The face value is $1000. The coupon rate is 8 percent and the annual interest is paid until the maturity date 10 years from now. similar nonconvertible bonds are yielding 12 percent (YTM) in the marketplace. a.)Calculate the straight bond value of this bond. b.) Calculate the conversion value of the Cohan...

Question