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?
The conversion price of a convertible bond is its face value divided by the number of ...
This solution looks at the conversion price and value of a bond.