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 $25. A straight bond could have been sold with a 10 percent stated interest rate. The straight value of the bond is
A) $1,328.
B) $1,250.
C) $1,000.
D) $771.
Correct Answer:
Verified
Correct Answer:
Verified
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