Determine each of the following
1. What is the conversion price if TBC’s convertible debt is currently priced at $1,100 and it has a conversion ratio of 20?
2. What is your profit from converting TBC’s debt if the current TBC share price is $75?
3. You currently hold 10,000 shares of JB Corp.’s stock. If your holdings have a market value of $250,000 and the firm undertakes a 5 for 1 stock split, how many shares do you have after the split and what is the price of each?
4. You currently hold 10,000 shares of JB Corp.’s stock. If your holdings have a market value of $250,000 and the firm undertakes a 1 for 5 stock split, how many shares do you have after the split and what is the price of each?
5. Sam Inc. has 150,000 callable coupon bonds in the market. The coupon rate on the bonds is 9% and the bonds are callable at par. If the current YTM on similar debt is 4%, how much in interest payments can the firm save each year by refinancing the debt?