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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EBK FOUNDATIONS OF FINANCIAL MANAGEMENT
- 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
- Need answer pleasearrow_forwardA conversion of a face value $1 million convertible bond for $1 million of common stock would most likely be: B . reported as a $1 million fi nancing cash outfl ow and infl ow.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_forward
- 1 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_forwardA $1,000 face value bond has a conversion ratio of 49. You estimate the transaction costs of conversion to be 3.4% of the face value of the bond. What price must the stock reach in order for you to convert? The required price per share will be $ (Round to the nearest cent.)arrow_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
- You bought a convertible bond issued by Zip Corp which has a conversion ratio of 50 common shares for each $1,000 bond. A) At what stock price per share would you make a profit (“in the money”) if you bought the bond at par? B) What would you expect the bond to sell for in the market if Zip Corp’s stock trades at $28.50 per share?arrow_forwardA 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_forwardThis is about stocks and bonds...no.1 only...arrow_forward
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