Marcus Inc has convertible bonds Interest is paid annually U

Marcus, Inc. has convertible bonds. Interest is paid annually. Use the data below to determine the conversion value of each bond. Round to the nearest whole dollar.

Maturity: 10 years

Stock price: $35.00

Par value: $1,000

Conversion price: $40

Annual coupon: 9%

Straight debt yield: 11%

Correct asnwer is option a.$875

Conversion value = Conversion ratio * Market price of the stock

Conversion ratio=Par value / Conversion price

=1000/40=25

Conversion vaalue = 25*35=875

Marcus, Inc. has convertible bonds. Interest is paid annually. Use the data below to determine the conversion value of each bond. Round to the nearest whole dol

Marcus Inc has convertible bonds Interest is paid annually U

Solution

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