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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