What is the conversion value

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The XLarge Corporation has a convertible bond outstanding with a conversion ratio of 20.  The common stock is selling for $48.00.   The convertible bond is selling for $1,160.00.   SHOW ALL WORK FOR CREDIT

a) What is the conversion value?  __________

b) What is the conversion premium?  ________

c) What is the conversion price?  ____________

d) If the common stock falls to $45, and the pure bond price is $890, will the bond sell for greater than its conversion value?

e) Why do firms offer convertible bonds?  (discuss)

Reference no: EM131412454

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