ZuoTi.Pro
Question

3. A holder of Rainbow Funds convertible bonds have a $1.000 par and sell at par. The bonds can be convert to 25 shares of co
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Conversion Ratio = 25

Par Value of bond = $1000

Conversion Price = Par Value of Bond / Conversion Ratio = 1000/25 = $40

Hence, the minimum stock price to be willing to convert is $40

0 0
Add a comment
Know the answer?
Add Answer to:
3. A holder of Rainbow Funds convertible bonds have a $1.000 par and sell at par....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Determining values-Convertible bond Eastern Clock Company has an outstanding issue of convertible bonds with a $2,000...

    Determining values-Convertible bond Eastern Clock Company has an outstanding issue of convertible bonds with a $2,000 par value. These bonds are convertible into 35 shares of common stock. They have a 9% annual coupon interest rate and a 25-year maturity. The interest rate on a straight bond of similar risk is currently 13%. a. Calculate the straight bond value of the bond. b. Calculate the conversion (or stock) value of the bond when the market price of the common stock...

  • Hura Corp. Has 500 convertible bonds outstanding. the bonds have a coupon rate of 5.5%, seven...

    Hura Corp. Has 500 convertible bonds outstanding. the bonds have a coupon rate of 5.5%, seven years to maturity and are currently priced at &1,250. The bonds have a conversion ratio of 25 and Hura Corp.'s common stock is currently priced at $52.35 per share. How much would you make per share (in $) by converting these bonds?

  • Conversion price Calculate the conversion price for each of the following convertible bonds: a. A $1,000-par-value...

    Conversion price Calculate the conversion price for each of the following convertible bonds: a. A $1,000-par-value bond that is convertible into 40 shares of common stock. b. A$1000-par-value bond that is convertible into 25 shares of common stock. c. A $1,000-par-value bond that is convertible into 125 shares of common stock. a. The conversion price is $ per share. (Round to the nearest cent.)

  • Net income for the year $1,210,000 7% convertible bonds issued at par ($1,000 per bond); each...

    Net income for the year $1,210,000 7% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 30 shares of common stock 1,970,000 6% convertible, cumulative preferred stock, $100 par value; each share is convertible into 3 shares of common stock 4,200,000 Common stock, $10 par value 5,820,000 Tax rate for 2021 20% Average market price of common stock $25 per share There were no changes during 2021 in the number of common shares, preferred shares, or...

  • Determining values—Convertible bond  ​Craig's Cake Company has an outstanding issue of 20​-year convertible bonds with a...

    Determining values—Convertible bond  ​Craig's Cake Company has an outstanding issue of 20​-year convertible bonds with a $800 par value. These bonds are convertible into 90 shares of common stock. They have a 16​% annual coupon interest​ rate, whereas the interest rate on straight bonds of similar risk is 12​%. a.  Calculate the straight bond value of this bond. b. Calculate the conversion​ (or stock) value of the bond when the market price is ​$16 per share of common stock. c.  ...

  • Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 12,000 shares of common stock outstanding...

    Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 12,000 shares of common stock outstanding at the beginning of 2016. Francis issued 1,500 additional shares on May 1 and 1,000 additional shares on September 30. It also has two convertible securities outstanding at the end of 2016. These are: Convertible preferred stock: 1,250 shares of 9.0%, $50 par, preferred stock were issued on January 2, 2013, for $60 per share. Each share of preferred stock is convertible into 3...

  • Determining values—Convertible bond Craig's Cake Company has an outstanding issue of 15-year convertible bonds with a...

    Determining values—Convertible bond Craig's Cake Company has an outstanding issue of 15-year convertible bonds with a $800 par value. These bonds are convertible into 75 shares of common stock. They have a 12% annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 17%. a. Calculate the straight bond value of this bond. b. Calculate the conversion (or stock) value of the bond when the market price is $23 per share of common stock. c....

  • A certain 6% annual coupon rate convertible bond (maturing in 20 years) is convertible at the...

    A certain 6% annual coupon rate convertible bond (maturing in 20 years) is convertible at the holders option into 20 shares of common stock. The bond is currently trading at $800. the stock (which pays .71 a share in annual dividens) is currently priced in tje market at $29.78 a share. a) what is the bonds conversion price b) what is the conversion ratio c) what is the conversion value & parity d) what is the conversion permium in dollars...

  • Determining values-Convertible bond Craig's Cake Company has an outstanding issue of 8-year convertible bonds with a...

    Determining values-Convertible bond Craig's Cake Company has an outstanding issue of 8-year convertible bonds with a $800 par value. These bonds are convertible into 60 shares of common stock. They have a 11 % annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 14% a. Calculate the straight bond value of this bond b. Calculate the conversion (or stock) value of the bond when the market price is $22 per share of common stock...

  • Western World Inc. issues $40,000,000 of convertible bonds with each $1,000 bond convertible into 15 shares...

    Western World Inc. issues $40,000,000 of convertible bonds with each $1,000 bond convertible into 15 shares of the company’s $1 par common stock.  The bonds are issued at 103 on January 1, 2020 and pay interest in Jan and July and mature on January 1, 2025.   On July 1, 2021, 25% of the bonds are converted when the stock price is $80 per share and 30% of the bond premium has been amortized.  Record the following transactions: Bond as issuance Conversion of $40,000,000...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT