1. Connelly, Inc. has 9% conveible bonds that were issued at par, but are now worth $1,100. The bonds can be converted into 30 shares of common stock. The company's common stock currently sells for $37.50. What is the conversion price? Round to the nearest whole dollar.
2. Calmer Inc. plans to issue 20-year bonds with annual interest payments and with 20 warrants attached. Each warrant is expected to have a value of $0.50. A similar straight-debt issue would require an 12% coupon. What coupon rate should be set on the bonds-with-warrants so that the bond will sell for $1,000?