Response to the following questions:
1. A certain convertible bond has a conversion ratio of 21 and a conversion premium of 20%. The current market price of the underlying share is $40. What is the bond's conversion equivalent?
2. You are considering investing $850 in Whichway Corporation. You can buy shares at $25; this share pays no dividends. You can also buy a convertible bond that is currently trading at $850 and has a conversion ratio of 30. It pays $50 per year in interest. Given you expect the price of the share to rise to $35 in one year, which instrument should you purchase?