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Assume that you purchased a $1,000 convertible corporate bond. Also assume the bond can be converted...

Assume that you purchased a $1,000 convertible corporate bond. Also assume the bond can be converted to 28.5 shares of the firm’s stock. What is the dollar value that the stock must reach before investors would consider converting to common stock? (Round your answer to 2 decimal places.)

Conversion price
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Answer #1

Conversion Price

Conversion Price = Face Value of the Bond / Conversion ratio

= $1,000 per Bond / 28.5 Shares

= $35.09

“Hence, the dollar value that the stock must reach before investors would consider converting to common stock will be $35.09”

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