Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
14th Edition
ISBN: 9780133507690
Author: Lawrence J. Gitman, Chad J. Zutter
Publisher: PEARSON
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Chapter 17, Problem 17.9P

Conversion ratio What is the conversion ratio for each of the following bonds?

  1. a. A $1,000-par-value bond that is convertible into common stock at $43.75 per share.
  2. b. A $1,000-par-value bond that is convertible into common stock at $25 per share.
  3. c. A $600-par-value bond that is convertible into common stock at $30 per share.
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A bond is issued at a price of 103 and retired early at aprice of 97. Which of the following is true?a. A gain will be reported on the income statement whenthe bond is issued.b. A loss will be reported on the income statement whenthe bond is issued.c. A gain will be reported on the income statement whenthe bond is retired.d. A loss will be reported on the income statement whenthe bond is retired.
Convertible bonds are: I. options attached to bonds that give the bond holder the right to purchase stock at a preset price without giving up the bond. II. bonds in which the issue matures (converts) a little each year. III. bonds collateralized with certain types of automobiles. IV. bonds that may be converted to a certain number of shares of stock determined by the conversion ratio. a. I only b. I and II only c. I, II, and III d. IV only e. I and III only
Johansen Company issued a bond at a discount. Which of the following shows how the issuance of the bonds affects the financial statements? A. B. C. D. Assets = Liabilities + + + Multiple Choice. O Balance Sheet OOO Option D Option C Option A Option B Stockholders' Equity n/a n/a n/a Revenue n/a n/a n/a n/a Income Statement Expense + n/a + n/a = Net Income Statement of Cash Flows +OA +FA +FA +OA n/a n/a

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Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)

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