Swift Shoe has convertible bonds outstanding that are callable at $1,085. The bonds are convertible into...

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Swift Shoe has convertible bonds outstanding that are callable at $1,085. The bonds are convertible into...

Swift Shoe has convertible bonds outstanding that are callable at $1,085. The bonds are convertible into 23 shares of common stock. The stock is currently selling for $64.30 per share.

Required:

If the firm announces that it is going to call the bonds at $1,085, what action are bondholders likely to take?

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Answer 1

Answer #1

a Conversion Value = No.of Shares*Market Price per share = 23*64.30. 1,478.90 Exercise the Conversion Option = Yes Market Val

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Answer 2

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