Looper Industries Bonds Have a Face Value of $1,000 and Can

Multiple Choice

Looper Industries bonds have a face value of $1,000 and can be exchanged for 30 shares of stock.The stock is selling for $35 a share.Looper has an outstanding call option on the bonds at $1,040.If the bonds are called,the holders must either convert or surrender their bonds.What should be the current market value of one of these bonds if the option premium per bond is $15? Assume the bond coupon rate equals the market rate of interest at time of call.

A) $1,040
B) $1,065
C) $1,025
D) $1,030
E) $1,035