A convertible debenture is convertible at $25. It has a nondilutive feature in its indenture. If a stock dividend is distributed, which TWO of the following statements are TRUE?1. The conversion price will be reduced2. The conversion price will be increased3. The conversion ratio will be reduced4. The conversion ratio will be increased
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XYZ convertible debentures are convertible into 20 shares of XYZ Corporation common stock. If the bonds were selling in the market at $960, what would the common stock need to be selling for to be on parity?
The Barge Towing Corporation has announced in a tombstone ad that it will issue $500,000,000 of 6 1/2% convertible subordinated debenture bonds convertible into common stock at $10.50. The bonds will mature in November 2040 and are being issued at a $1,000 par value. The conversion ratio of the bonds is approximately:
Brawn subordinated debentures have a conversion price of $40. The bonds are selling in the market for 91% of par value. If the common stock is trading at $36, which TWO of the following statements are TRUE?1. The stock is selling at a discount to parity with the bond2. The stock is selling at a premium to parity with the bond3. A profitable arbitrage opportunity exists by liquidating the stock after converting the bond4. Liquidating the stock after converting the bond would not be currently profitable
A corporation has issued a bond with a 5% coupon that is convertible into common stock at $40. The bond is selling currently trading at par and the stock is selling at $39.00. If the bond increased in value by 20 points, what is parity of the stock?
Which TWO of the following statements concerning convertible bonds are TRUE?1. Coupon rates are usually higher than nonconvertible bonds of the same issuer2. Convertible bondholders are considered creditors of the corporation3. Convertible bonds are usually issued by companies with strong credit ratings4. It is possible that a convertible bond will sell at a price based solely on its inherent value as a bond
A 7% convertible bond has a conversion ratio of 40. The bond has a nondilutive feature and the common is selling at $43 a share. If the company distributes a 10% stock dividend, which of the following statements is TRUE regarding the convertible bond?
A convertible bond has a conversion price of $50 and is currently selling in the market at $1,100. The conversion ratio is:
If an issuer”s convertible bonds are converted by bondholders, what is the effect on the issuer”s outstanding common stock?