a.
To calculate: The conversion value of O’Reilly Moving Company’s bond.
Introduction:
Conversion security:
It is a kind of security which as per convenience can easily be converted into another security according to the discretion of the security holder.
b.
To Calculate: The conversion premium of O’Reilly Moving Company.
Introduction:
It is a kind of security which as per convenience can easily be converted into another security as per the discretion of the security holder.
c.
To calculate: The conversion price of O’Reilly Moving Company.
Introduction:
Convertible security:
It is a kind of security which as per convenience can easily be converted into another security as per the discretion of the security holder.
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Loose Leaf for Foundations of Financial Management Format: Loose-leaf
- Suppose you own a convertible bond that has a conversion ratio equal to 62. Each convertible bond has a face value equal to $1,000. The current market value of the company's common stock is $16, and the bond is selling for $1,042. If you want to liquidate your position today because you need money to pay your rent, should you sell the bond or should you convert the bond into common stock and then sell the stock? Explain your answer. Round your answers to the nearest dollar. Selling the bond would generate $_______ . Converting the bond and selling the common stock would generate $_______ . Thus, it would be better to SELL THE BOND / CONVERT THE BOND INTO COMMON STOCK AND THEN SELL THE STOCKarrow_forwardSuppose you own a convertible bond that has a conversion ratio equal to 58. Each convertible bond has a face value equal to $1,000. The current market value of the company's common stock is $17, and the bond is selling for $1,036. If you want to liquidate your position today because you need money to pay your rent, should you sell the bond or should you convert the bond into common stock and then sell the stock? Explain your answer. Round your answers to the nearest dollar. Selling the bond would generate $ . Converting the bond and selling the common stock would generate $ . Thus, it would be better to .arrow_forwardBreuer Investment's convertible bonds have a $1,000 par value and a conversion price of $45 a share. What is the convertible issue's conversion ratio? Round your answer to two decimal places.arrow_forward
- Breuer Investment’s convertible bonds have a $1,000 par value and a conversion price of $50 a share. What is the convertible issue’s conversionratio?arrow_forwardA$1,000 face value convertible bond has a conversion ratio of 31 and is about to mature. Ignoring any transaction costs, what price must the stock surpass in order for you to convert? The required price per share will be $ (Round to the nearest cent.)arrow_forward1 ences The bonds of Generic Labs Inc. have a conversion premium of $60. Their conversion price is $25. The common stock price is $21.00. What is the price of the convertible bond? (Do not round intermediate calculations and round your answer to 2 decimal places.) Mc Graw Hill Convertible bond price Prev 2 of 10 MacBook Air Next >arrow_forward
- Whiston Securities recently issued convertible bonds with a $1,000 parvalue. The bonds have a conversion price of $20 per share. What is the bonds’ conversionratio, CR?arrow_forwardH3. On a given day a share dealer maintains a bid price of R1 000.50 for a bond and an ask price of R1 003.25. The dealer made 10 trades that totalled 500 bonds traded that day. What was the dealer's gross trading profit for this bond? Please show proper step by step calculationarrow_forwardThe bonds of Goniff Bank & Trust have a conversion premium of $34. Their conversion price is $25. The common stock price is $19.50. Assume each bond has a $1,000 par value. What is the price of the convertible bonds? (Do not round intermediate calculations and round your answer to 2 decimal places.) Mc Graw Convertible bond price un Prev 1 of 10 MacBook Air Next >arrow_forward
- A conversion of a face value $1 million convertible bond for $1 million of common stock would most likely be: A . reported as a $1 million investing cash infl ow and outfl owarrow_forwardA bond has a face value of $100 and a conversion ratio of 25. What is a good time to convert to equity for bond holders given the following stock price? A) $0.3 B) $3 C) $5 D) $4arrow_forwardaa.2 Assumes Venture Healthcare sold bonds that have a ten-year maturity, a 12 percent coupon rate with annual payments, and a $1,000 par value. What would be the bonds value? Hint: Watch the Homework Hint video to figure out how to calculate this using Excel. Choice: $750 Choice: $1,000 Choice: $1,500 Choice: $2,000arrow_forward
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