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.

Expert Solution

Conversion value of the bond = (Par value/ Conversion price)* Current price of stock

= (1000/ 25)* 20

= 40* 20

= $800

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