question archive Starbucks’ common stock now sells for $13 each share, and its 10% convertible debentures (issued at par = $1,000) sell for $325
Starbucks’ common stock now sells for $13 each share, and its 10% convertible debentures (issued at par = $1,000) sell for $325
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Starbucks’ common stock now sells for $13 each share, and its 10% convertible debentures (issued at par = $1,000) sell for $325. Each debenture can be converted into 30 shares of common stock at any time before 2016. What is the conversion value of the bond?
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Answer:
Conversion value:
= Number of stocks×1 Stock rate
= 30×$13
= $390
