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    conversion price of bonds

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    5. DNA Labs, Inc. has a $1,000 convertible bond outstanding that can be converted into 40 shares of common stock. The common stock is currently selling for $26.75 a share and the convertible bond is selling for $1,118.50.

    a. What is the conversion value of the bond?
    b. What is the conversion premium?
    c. What is the conversion price?

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    Solution Preview

    a. What is the conversion value of the bond?
    conversion value = Current Stock Price * conversion ratio = $26.75 *40 = ...

    Solution Summary

    formula and computation given

    $2.19

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