Why do you think chris is suggesting a conversion price

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Reference no: EM133065175

Case: S&S Air Ltd's convertible bond

Question 1: Why do you think Chris is suggesting a conversion price of $25? Given that the company is not publicly traded, does it even make sense to talk about a conversion price?

Question 2: Is there anything wrong with Todd's argument that it is cheaper to issue a bond with a convertible feature because the required coupon is lower?

Question 3: Is there anything wrong with Mark's argument that a convertible bond is a bad idea because it allows new shareholders to participate in gains made by the company?

Question 4: How can you reconcile the arguments made by Todd and Mark?

Question 5: In the course of the debate, a question comes up concerning whether or not the bonds should have an ordinary (not make-whole) call feature. Chris confuses everybody by stating, 'The call feature lets S&S Air force conversion, thereby minimising the problem that Mark has identified'. What is he talking about? Is he making sense?

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Reference no: EM133065175

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