A conversion feature allows

Assignment Help Financial Management

Reference no: EM131310876

1. A conversion feature allows:

A. the bondholder to redeem the bond before the maturity date.

B. the corporation to redeem the bond before the maturity date.

C. the bondholder to convert the bond to common stock.

D. the bondholder to demand increased collateral.

2. A convertible bond is currently selling for $970. It is convertible into 15 shares of common which presently sell for $50 per share. The conversion premium is

A. $90

B. $220

C. 57 shares

D. 13 shares

Reference no: EM131310876

Questions Cloud

Assuming that the risk-free interest rate : How do I calculate the level of the S&P 500 Assuming that the risk-free interest rate is 2.5 percent, the growth rate of dividends is 1 percent and the current level of dividends is $70, use the dividend-discount model to compute the level of the S&P..

Operating motive for merger and consolidation : Which of the following is not a financial motive but rather an operating motive for merger and consolidation? Mirrlees Corp. has 10,000 7% bonds convertible into 30 shares per $1000 bond. Mirrlees has 1,000,000 outstanding shares. Mirrlees has a tax ..

Type of merger decreases competition : The Celluloid Collar Corporation has $210,000 in tax loss carryforwards. The Bowstring Shirt Company, a firm in the 30% tax bracket, would be willing to pay (on a nondiscounted basis) the sum of ______________ for the carryforward alone. Which of the..

Conversion premium-convertible bond is currently selling : A bond with a coupon rate of 6.5%, maturing in 10 years at a value of $1,000 and a current market price of $950, will have a yield to maturity (using the approximation formula) of. A convertible bond is currently selling for $1,125. It is convertible..

A conversion feature allows : A conversion feature allows: A convertible bond is currently selling for $970. It is convertible into 15 shares of common which presently sell for $50 per share. The conversion premium is

Forward exchange rate to equal currency traders : The factor that can account for failure of the forward exchange rate to equal currency traders and ash, expectation of the future spot exchange rate is: Buggy Whip Manufacturing Company is issuing preferred stock yielding 8%. Selten Corporation is co..

Finance a capacity expansion project : You are considering to borrow 1.25 million dollars to finance a capacity expansion project. The loan is payable in three equal annual installments in years 1, 2, and 3 after you receive the loan. The effective interest rate is 22%. If your tax rate i..

What is the net cost of the call premium : Buchanan Corp. is refunding $10 million worth of 10% debt. The new bonds will be issued for 8%. The corporation's tax rate is 35%. The call premium is 9%. What is the net cost of the call premium? A bond with a coupon rate of 6.5%, maturing in 10 yea..

What is IBM preferred stock beta with respect to market : Suppose that you own IBM preferred stock that pays an annual, fixed, and perpetual dividend of $10 which is worth $100 per share. The market return is 12% and the risk-free rate is 4%. What is IBM preferred stock's beta with respect to the market?

User Account

All Pages