What is the conversion price of the bond

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XYZ Company has $10 million in convertible bonds outstanding. Each $1,000 par value bond is convertible into 20 shares of common stock. Current common share price is $45 and the current convertible bond price is $1,010.

Problem a. What is the conversion price of the bond?

Problem b. What is the conversion value of the bond?

Problem c. Is there a conversion premium, discount or parity on the bond currently?

Problem d. Why will a convertible bond have a floor value and will not necessarily trade in line with its conversion value?

Reference no: EM132992296

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