Whether the following convertible bond has a beneficial conversion option or not. Given information: Company issued bonds worth $1,000. Term period for conversion is 8 years Market price of each share is $23. Number of shares converted to is 50 shares.

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Answer 1

Question

Chapter 14, Problem 14.29BE

a.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 8 years

Market price of each share is $23.

Number of shares converted to is 50 shares.

b.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $11.

Number of shares converted to is 100 shares.

c.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $38.

Number of shares converted to is 25 shares.

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Current Attempt in Progress Ivanhoe Corp. offers three-year, 6% convertible bonds (par $1,000). Each $1,000 bond may be converted into 155 common shares, which are currently trading at $3 per share. Similar straight bonds carry an interest rate of 9%. 1,100 bonds are issued at par. Assume that holders of the convertible debt of Ivanhoe Corp. decide to convert their convertible bonds before the bonds mature. The bond discount will be partially amortized at this point. The Contributed Surplus - Conversion rights amounted to be $83,533. Assume that the unamortized portion is $14,020 and that IFRS is a constraint. Prepare the journal entry to record the conversion. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles Debit Credit

Conversion (or stock) value What is the conversion (or stock) value of each of the following convertible bonds? 1. A $1,000-par-value bond that is convertible into 25 shares of common stock. The common stock is currently selling for $50 per share.

The 12-year $1,000 par bonds of Vail Inc. pay 8 percent interest. The market's required yield to maturity on a comparable-risk bond is 12 percent. The current market price for the bond is $850. a. Determine the yield to maturity. b. What is the value of the bonds to you given the yield to maturity on a comparable-risk bond? c. Should you purchase the bond at the current market price? Question content area bottom Part 1 a. What is your yield to maturity on the Vail bonds given the current market price of the bonds? enter your response here% (Round to two decimal places.)

Answer 2

Question

Chapter 14, Problem 14.29BE

a.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 8 years

Market price of each share is $23.

Number of shares converted to is 50 shares.

b.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $11.

Number of shares converted to is 100 shares.

c.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $38.

Number of shares converted to is 25 shares.

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Answer 3

Question

Chapter 14, Problem 14.29BE

a.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 8 years

Market price of each share is $23.

Number of shares converted to is 50 shares.

b.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $11.

Number of shares converted to is 100 shares.

c.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $38.

Number of shares converted to is 25 shares.

Expert Solution & Answer

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Answer 4

Question

Chapter 14, Problem 14.29BE

a.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 8 years

Market price of each share is $23.

Number of shares converted to is 50 shares.

b.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $11.

Number of shares converted to is 100 shares.

c.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $38.

Number of shares converted to is 25 shares.

Expert Solution & Answer

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Answer 5

Chapter 14, Problem 14.29BE

a.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 8 years

Market price of each share is $23.

Number of shares converted to is 50 shares.

b.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $11.

Number of shares converted to is 100 shares.

c.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $38.

Number of shares converted to is 25 shares.

Answer 6

Chapter 14, Problem 14.29BE

a.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 8 years

Market price of each share is $23.

Number of shares converted to is 50 shares.

Answer 7

Chapter 14, Problem 14.29BE

a.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 8 years

Market price of each share is $23.

Number of shares converted to is 50 shares.

Answer 8

b.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $11.

Number of shares converted to is 100 shares.

Answer 9

b.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $11.

Number of shares converted to is 100 shares.

Answer 10

c.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $38.

Number of shares converted to is 25 shares.

Answer 11

c.

To determine

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $38.

Number of shares converted to is 25 shares.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 14 - What conditions or terms does a note payable...Ch. 14 - If the market rate of interest exceeds the face or...Ch. 14 - What is included in bond issue costs and how...Ch. 14 - Prob. 14.4Q Ch. 14 - When a bond is issued at a discount, will its...Ch. 14 - Prob. 14.6Q Ch. 14 - Prob. 14.7Q Ch. 14 - Under IFRS, how do firms account for convertible...Ch. 14 - Prob. 14.9Q Ch. 14 - Can companies reclassify short-term debt expected...

Whether the following convertible bond has a beneficial conversion option or not. Given information: Company issued bonds worth $1,000. Term period for conversion is 8 years Market price of each share is $23. Number of shares converted to is 50 shares.

Solution Summary: The author explains that the following convertible bond has a beneficial conversion as it is resulting into gain of 3.

Videos

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 8 years

Market price of each share is $23.

Number of shares converted to is 50 shares.

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $11.

Number of shares converted to is 100 shares.

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $38.

Number of shares converted to is 25 shares.

Want to see the full answer?

Chapter 14 Solutions

Whether the following convertible bond has a beneficial conversion option or not. Given information: Company issued bonds worth $1,000. Term period for conversion is 8 years Market price of each share is $23. Number of shares converted to is 50 shares.

Solution Summary: The author explains that the following convertible bond has a beneficial conversion as it is resulting into gain of 3.

Videos

Whether the following convertible bond has a beneficial conversion option or not. Given information: Company issued bonds worth $1,000. Term period for conversion is 8 years Market price of each share is $23. Number of shares converted to is 50 shares.

Whether the following convertible bond has a beneficial conversion option or not. Given information: Company issued bonds worth $1,000. Term period for conversion is 5 years Market price of each share is $11. Number of shares converted to is 100 shares.

Whether the following convertible bond has a beneficial conversion option or not. Given information: Company issued bonds worth $1,000. Term period for conversion is 5 years Market price of each share is $38. Number of shares converted to is 25 shares.

Want to see the full answer?

Chapter 14 Solutions

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 8 years

Market price of each share is $23.

Number of shares converted to is 50 shares.

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $11.

Number of shares converted to is 100 shares.

Whether the following convertible bond has a beneficial conversion option or not.

Given information:

Company issued bonds worth $1,000.

Term period for conversion is 5 years

Market price of each share is $38.

Number of shares converted to is 25 shares.