A bond with a face value of $1000 is convertible to common stock at a conversion ratio of 60. If the stock is currently trading at $ 8 per share, the value of the bond is probably closest in value to which of the following?

A. about $1000
B. about $492
C. less than $492
D. about $508
E. above $1666

B. about $492

Explanation:

The Face value of bond is $1,000 The Conversion ratio is 60 and the current Stock price is $8.20 per share

The conversion ratio of 60 means that for each convertible bond, there would be 60 shares to be issued to the holder if they want to convert their bond to the shares.

Therefore, for one single bond, the number of shares to be issued is 60.

Calculating the closet value of the convertible bond will then be:

Value of the bond = Conversion ratio * Stock price

= 60 x $8.20

= $492.00

Therefore, the value of the bond is closet to $492.00.

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.