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Question 1: Successful forced conversion of convertible bonds through a call requires that:
Q1. What is the conversion price? Q2. What is the conversion value? Q3. Compare the pure bond value.
a. What is the minimum price at which the convertible should sell?
The bonds have a conversion price of $40 a share. What is the convertible issue's conversion ratio?
What is the effect on earnings per share of each alternative, if it is assumed that profits before interest and taxes will be 20 percent of total assets?
What is the estimated floor price of the convertible at the end of Year 3 if the required rate of return on a similar straight-debt issue is 10.0 percent?
What purpose does the variety in bond features (types and characteristics) serve?
a. What is the intrinsic value of the warrant? b. What is the speculative premium on the warrant?
a) What is the current yield of this bond? b) What is the value of the bond based on the market price of the common stock?
1. What is the conversion ratio? 2. What is the conversion price? 3. What is the conversion premium?
Prepare the journal entries to record the interest expense at April 1, 2007. Assume that interest payable was credited when the bonds were issued
For each of the unrelated transactions described below, present the entry(ies) required to record the bond transactions.
Calculate the premium on the bonds, that is, the percentage excess of the conversion price over the stock price at the time of issue.
A lot of small dot.com companies got financing in the form of convertible debt.
What is the bond's conversion ratio? What is the bond's straight-debt value?
What is the after tax cost of this component of your capital structure?
At the time of issue, the market rate for such bonds is 10%. Compute the issue price of the bonds.
The common stock obtained upon conversion is selling for $54 per share. What is the convertible bond's conversion premium?
(i) Conversion value, (ii) Market conversion price, (iii), Conversion premium per share, (iv) Conversion premium ratio, (v) Premium over straight value
If the corporation uses the straight-line method of amortization of bond discount, the amount of bond interest expense to be recognized on July 1, 2007, is ____
How do companies manage the maturity structure of their debt?
The warrant carries the option to purchase a half share of common stock for $40. What is the speculative premium if the stock price is $50?
What is the conversion (or stock) value of each of the following convertible bonds?
If similar bonds, which are not convertible, are currently yielding 12 percent, what is the pure bond value of this convertible bond?
Similar nonconvertible bonds are priced to yield 9%. The value of the convertible bond is at least: