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 7 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 ________.
A) $750
B) $772 at the minimum
C) $1,250 at the minimum
D) $1,000
Correct Answer:
Verified
Correct Answer:
Verified
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