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Conversion price of a bond

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Reading Railroad common stock is currently priced at $30, and its 8% convertible debentures (issued at par, or $1,000) are priced at $850. Each debenture can be converted into 25 shares of common stock at any time before 2005. What is the conversion price (CP) and the conversion value of the bond?

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The conversion price of a convertible bond is its face value divided by the number of ...

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This solution looks at the conversion price and value of a bond.

$2.19
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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.

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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