Conversion value of convertible bonds


Problem: 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.

2) A $1,000-par-value bond that is convertible into 12.5 shares of common stock. The common stock is currently selling for $42 per share.

3) A $1,000-par-value bond that is convertible into 100 shares of common stock. The common stock is currently selling for $10.50 per share.

Please show all calculations and work.

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Finance Basics: Conversion value of convertible bonds
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