Question

On Friday Galifre Educational stock closes at $556.50. The Galifre Educational 1.750% Convertible debenture maturing December 16, 2022 closes at 53.568. After the closing bell Galifre Educational announces that the debenture will be called at 104.750. The debenture is convertible into common stock at $500 per share. A $1,000 bond is now worth

Answer 1

$1,113

Step-by-step explanation:

The computation of Worth is shown below:-

Price of investment stock = $556.50

Debenture is convertible at $500 per share

The worth of $1,000 bond = (Bond ÷ Debenture) × Price of investment stock

= ($1,000 ÷ $500) × $556.50

= $2 × $556.50

= $1,113

Therefore for computing the worth of $1,000 bond we simply applied the above formula.