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Question
You own a bond that has a face value of $1,000 and a conversion ratio of 26. You have just received notification that the bond is being called at a premium of $40. The stock price is $41.20 a share. You should _____ your bond because the conversion value is _____.A. convert; less than the call price by $40.00
B. convert; greater than the call price by $31.20
C. convert; greater than the call price by $4.75
D. not convert; less than the call price by $31.20
E. not convert; greater than the call price by $40.00
Answer
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