### What is the conversion price of zippy stock

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##### Reference no: EM132014650

Zippy Corporation just sold \$30 million of convertible bonds with a conversion ratio of 40. Each \$1,000 bond is convertible into 25 shares of Zippy’s stock.

a. What is the conversion price of Zippy’s stock?

b. If the current price of Zippy’s stock is \$15 and the Company’s annual stock return is normally distributed with a standard deviation of \$5, what is the probability that investors will find it attractive to convert the bond into Zippy stock in the next year?

Kindly write the answer in MS words..

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