Please provide answer this following requirements on these financial accounting question Marks Technologies Inc. has issued a convertible bond with a facevalue of $1,200. The conversion price is $40 per share, while thestock is currently selling for $35 per share. The bond pays $70 peryear in interest and is selling in the market for $1,150. The bondmatures in 6 years, and market rates are 9% annually.a) What is the conversion ratio?b) What is the conversion value?

Step 1: Definition of Conversion Ratio and Conversion ValueConversion Ratio is the number of shares…

Answered: Marks Technologies Inc. has issued a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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What is the conversion ratio?
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A convertible bond has a face value of $900 and a conversion price of $45 per share. The stock is currently selling at $32 per share. The bond pays $60 per year in interest and is selling in the market for $880. It matures in 6 years, and market rates are 8% annually.
(Related to Checkpoint 9.2) (Yield to maturity) The Saleemi Corporation's $1,000 bonds pay 9 percent interest annually and have 15 years until maturity. You can purchase the bond for $1,125. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 6 percent? a. The yield to maturity on the Saleemi bonds is %. (Round to two decimal places.)
(Related to Checkpoint 9.2) (Yield to maturity) The Saleemi Corporation's $1,000 bonds pay 5 percent interest annually and have 12 years until maturity. You can purchase the bond for $1,125. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 5 percent?
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The Photo Film Company’s bonds have fouryears remaining to maturity. Interest is paid annually,the bonds have a $1,000 par value, and the couponinterest rate is 8.75%.(a) What is the yield to maturity at a current marketprice of $1,108?(b) Would you pay $935 for one of these bonds ifyou thought that the market rate of interest was9.5%?
Ray Co.’s bonds, maturing in 3 years, pay 8 percent interest on a $1,000 face value. Interest is paid once per year. If your required rate of return is 8 percent, what is the value of the bond? Now assume that the required rate of return increased to 9%. Would you recommend investors to buy the bond? What can you conclude about the relationship between bond prices and interest rates? Assume that the modified duration of this bond is 2.60 years. If the market yield changes by 2%, how much change will there be in the bond's price in %
McConnell Corporation has bonds on the market with 19 years to maturity, a YTM of 9.4 percent, a par value of $1,000, and a current price of $1,186.50. The bonds make semiannual payments. What must the coupon rate be on these bonds? (Note: first find the semi-annual payment. Then convert it into an annual payment and use this annual payment to find the coupon rate as an APR.) Multiple Choice O 11.52% O 9.71% O 19.45% O 23.08% 11.62%
San Miguel Company's 18-year, $1,000 par value bonds pay 6.5 percent interest annually. The market price of the bond is $1,105, and your required rate of return is 8.5 percent. a. Compute the bond's expected rate of return. b. Determine the value of the bond to you given your required rate or return. c. Should you purchase the bond? Why or why not? (*You must show your calculation process as well.)
Bayside Inc. sells $5,000,000 of five-year, 10% bonds at the start of the year. The bonds pay interest yearly and have an effective yield of 9%. At what amount would the bonds sell for? What would be the bond carrying value at the end of Year 1? What amount of bond premium would be amortized for Year 2?

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