Ford Motor Company has issued 8% convertible debentures, convertible at a 10:1 ratio. Currently the debenture is trading at 94.

Question

2 years ago

10

The stock is trading at $80. What is the conversion price of the stock

1 answer:

Dafna1 [17] · Answer 1 · 2022-08-11T02:41:37+03:00

Answer: $100

Explanation:

Sometimes Debt instruments like Debentures and Bonds are convertible to shares in the company.

To calculate the Conversion Price, the following formula is used;

= Par Value / Conversion Ratio

= 1,000/10

= $100

Par value is usually $1,000 for such instruments.