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    Calculating conversion or stock value of convertible bond.

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    What is the conversion (or stock) value of each of the following convertible bonds?

    a. A $1,000-par-value bond that is convertible into 25 shares of common stock.The common stock is currently selling for $50 per share.

    b. A $1,000-par-value bond that is convertible into 12.5 shares of common stock. The common stock is currently selling for $42 per share.

    c. A $1,000-par-value bond that is convertible into 100 shares of common stock. The common stock is currently selling for $10.50 per share.

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    Solution:

    a.A $1,000-par-value bond that is convertible into 25 shares of common stock.The common stock is currently selling for $50 per share.
    Conversion ratio=25
    Market price of ...

    Solution Summary

    Solution describes the steps for calculating conversion value of convertible bond.

    $2.19

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