Question #81
Reading: Reading 27 Valuation and Analysis of Bonds With Embedded Options - Anwers
PDF File: Reading 27 Valuation and Analysis of Bonds With Embedded Options - Anwers.pdf
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Question
What is the market conversion price of a convertible security?
Answer Choices:
A. The value of the security if it is converted immediately
B. The price that an investor pays for the common stock in the market
C. The price that an investor pays for the common stock if the convertible bond is purchased and then converted into the stock. Explanation The market conversion price, or conversion parity price, is the price that the convertible bondholder would effectively pay for the stock if she bought the bond and immediately converted it. market conversion price = market price of convertible bond รท conversion ratio. (Module 27.8, LOS 27.o)
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