Find the Solution to the Following Questions Regarding Convertible Bonds

Essay

Find the solution to the following questions regarding convertible bonds.
(a) Calculate the conversion price for each of the following bonds.
A $1,000-par-value bond convertible into 25 shares of common stock.
A $1,000-par value bond convertible into 100 shares of common stock.
(b) Calculate the conversion ratio for each of the following bonds. A $1,000 par-value bond convertible into common stock at $50 per share.
A $1,000 par-value bond convertible into common stock at $40 per share.
(c) Calculate the stock value for each of the following convertible bonds.
A $1,000 par-value bond convertible into common stock at $25 per share. The current market price of the stock is $30 per share.
A $1,000 par-value bond convertible into 100 shares of common stock. The current market price of the stock is $12 per share.