You bought a convertible bond issued by Spark Corp which has a conversion ratio of 25 common shares for each $1,000 bond. a. At what stock price per share would you make a profit (“in the money") if you bought the bond at par? b. What would you expect the bond to sell for in the market if the stock trades at $48 per share?

You bought a convertible bond issued by Spark Corp which has a conversion ratio of 25 common shares for each $1,000 bond. a. At what stock price per share would you make a profit (“in the money") if you bought the bond at par? b. What would you expect the bond to sell for in the market if the stock trades at $48 per share?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter6: Bonds (debt) - Characteristics And Valuation

Section: Chapter Questions

Problem 3PROB

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