A Firm Currently Has Outstanding a 9 Percent, $1,000 Convertible

Multiple Choice

A firm currently has outstanding a 9 percent, $1,000 convertible bond. The bond is convertible into100 shares of common stock at a conversion price of $10 per share and callable at $1,090. Thecurrent market price of the firm's stock is $12 per share. If the bond is called, the bond holder will most likely

A) convert the bond into stock realizing only par value.
B) do nothing and wait until the stock price goes up further.
C) convert the bond into stock realizing $200 over par value.
D) allow the call to be exercised realizing $90 over par value.