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The conversion ratio is 20 and the market price of the stock is

45. The market price of the straight bond is $850. What is the
minimum price of the convertible bond?

User Alwinius
by
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1 Answer

5 votes

Final answer:

The minimum price of the convertible bond is $900.

Step-by-step explanation:

To find the minimum price of the convertible bond, we need to consider the conversion ratio and the market price of the stock. The conversion ratio is the number of shares of stock that can be obtained from one convertible bond. In this case, the conversion ratio is 20. The market price of the stock is $45.

To find the minimum price of the convertible bond, we multiply the market price of the stock by the conversion ratio. So, the minimum price of the convertible bond is $45 * 20 = $900.

User WenChao
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