A Firm Has an Outstanding 15-Year Convertible Bond Issue with a $1,000

Multiple Choice

A firm has an outstanding 15-year convertible bond issue with a $1,000 par value and a stated annual interest rate of seven percent. The bond is convertible into 50 shares of common stock which has a current market price of $15. A straight bond could have been sold with a 10 percent stated interest rate. The market value of the bond is ___________at the minimum.

A) $1,250
B) $750
C) $1,000
D) $772