1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Slav-nsk [51]
3 years ago
11

A $50 par value convertible preferred stock is convertible into 5 shares (exercise price of $10). The preferred is selling for $

75, and the price of the common stock is $12. If the price of the common stock rises to $20, what is the minimum percentage price increase the holder of the preferred stock should experience?
Business
1 answer:
m_a_m_a [10]3 years ago
7 0

Answer:

33.3%

Explanation:

Cost of one common stock =$12

Cost of 5 common stock = $60

Price of preferred stock = $75, which is more than $60

Hence, it would not make sense to convert the preferred stock shared into common stock as of now.

Now, if P is $20, then price of 5 stocks:

= 5 × 20

= $100

Hence, the Preferred stock price must increase to at least $100 otherwise there will be arbitrage opportunity.

Increase in price:

= price of 5 stocks - Price of preferred stock

= $100 - $75

= $25

% increase = (Increase in price ÷ Price of preferred stock) × 100

                  = (25 ÷ 75) × 100

                  = 33.3%

You might be interested in
Exercise 4-8 (part level submission) plevin company ended its fiscal year on july 31, 2017. the company’s adjusted trial balance
Lostsunrise [7]

            Service Revenue.................................65000

            Rent Revenue..........................................6000

              To Income Summary.....................................................71000


             Income Summary..........................78900

                  To Depreciation Expense..............................................7000

                  To Salaries Expense.......................................................56400

                   To Utilitites Expense.........................................................15500

Retained Earnings.....................................................................7900

      To Income Summary...............................................................................7900

6 0
3 years ago
Read 2 more answers
How fast does q 500 Hz wave travel if its wavelength is 0.5m
Masteriza [31]

Where v is velocity/speed

f is frequency

and lambda is wavelength

v=(500)(0.5)= 250 m/s

Hope this helps!

6 0
3 years ago
Last year Attic charged $2,334,667 Depreciation on the Income Statement of Andrews. If early this year Attic purchased a new dep
olga nikolaevna [1]

Answer:

Note: The correct option is a. Increase Net Cash from operations.

Explanation:

Note: This question is not complete as the options are omitted. The options are therefore provided to complete the question before answering the question as follows:

a. Increase Net Cash from operations

b. Decrease Net Cash from operations on the Cash Flow Statement

c. No impact on Net Cash from operations

d. Just impact the Balance Sheet

The explanation of the answers is now provided as follows:

Since the assets was purchased early in the year, depreciation will be charged on it in the income statement for the year at the end of the year. Since depreciation is a non-cash item, it will added back to the net income in the indirect Cash Flow Statement method as one of the adjustments to the net income under the Cash from operations. This adding back of the depreciation will therefore lead to an Increase Net Cash from operations.

Therefore, the correct option is a. Increase Net Cash from operations.

6 0
2 years ago
What is the typical number of payments that can be made toward paying off a revolving credit loan?
lara [203]

THE ANSWER IS UNLIMITED


6 0
3 years ago
Read 2 more answers
Why would investors buy a junk bond?
gogolik [260]
Bond could increase in the future
7 0
3 years ago
Read 2 more answers
Other questions:
  • Which business partnership began by selling watches by mail? ben and jerry?
    11·1 answer
  • Squire Corporation charged Job 110 with​ $14,000 of direct materials and​ $12,600 of direct labor. Allocation for manufacturing
    13·2 answers
  • Which of the following statements describes GAAP?
    5·2 answers
  • William is a single writer (age 35) who recently decided that he needs to save more for retirement. his 2017 agi is $65,000 (all
    15·1 answer
  • Rational choices: A. are based on a comparison of total benefits and total costs. B. can only be made by those who are economist
    13·1 answer
  • The political business cycle refers to the phenomenon that just before elections, politicians enact _________ policies. After th
    7·1 answer
  • When writing an in-depth story about a large drug-manufacturing company, Beth presents the company not as a conglomerate edging
    13·1 answer
  • Nancy checks her margin account and notices she has an SMA balance in her account. A 10% stock dividend was declared this mornin
    15·2 answers
  • A candy company called Hearts Aflame Inc. forms an agreement with
    5·1 answer
  • MY STORE bought sweaters at a wholesale price of $12 and sold them for $34.99. Ron says the markup is $46.99 but you say he is w
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!