Convertible bonds are (choose all that apply) a. options attached to bonds that give the bondholder...
Convertible bonds are (choose all that apply)
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a. options attached to bonds that give the bondholder the right to purchase stock at a preset price without giving up the bond. |
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b. bonds in which the issue matures (converts) a little each year |
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c. bonds collateralized with certain types of automobiles |
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d. bonds that may be converted to a certain number of shares of stock determined by the conversion ratio. |
Homework Answers
Answer:
d. bonds that may be converted to a certain number of shares of stock determined by the conversion ratio.
Convertible bonds are bonds that may be converted to a certain number of shares of stock determined by the conversion ratio.
Remaining options are not applicable to convertible bonds.
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Convertible bonds are
(choose all that apply)
a. options attached to
bonds that give the bondholder...
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Convertible Bond Analysis Fifteen years ago, Roop Industries sold $400 milion of convertible bonds. The bonds had a 40-year maturity, a 5.75% coupon rate, and paid interest annually. They were sold at their $1,000 par value. The conversion price was set at $61.90, and the common stock price was $51 per share. The bonds were subordinated debentures and were given an A rating; straight nonconvertible debentures of the same quality yielded about 8.90% at the time Roop's bonds were issued....
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On January 1, 2021, Gless Textiles issued $28 million of 7%, 10-year convertible bonds at 101....
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On January 1, 2021, Gless Textiles issued $10 million of 7%, 20-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gless’s no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). Century Services purchased 15% of the issue as an investment. Required: 1. Prepare the journal entries for...
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