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aev [14]
3 years ago
5

A holder of Rainbow Funds convertible bonds with a $1,000 par and a $1,100 price can convert the bond to 25 shares of common sto

ck. The stock is currently priced at $36 per share. By what percent does the stock price have to rise to make conversion potentially attractive?
Business
1 answer:
omeli [17]3 years ago
7 0

Answer:

22.22%

Explanation:

Currently Rainbow's stocks are priced at $36 per stock.

If the holder can convert his $1,100 bond into 25 stocks, that means that each stock should be worth at least $44 (= $1,100 / 25).

So the current stock price should increase by $8 (= $44 - $36) in order for a trade to be attractive, $8 represents a 22.22% increase (= ($8 / $36) x 100)

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2 years ago
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7 0
3 years ago
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qaws [65]

Answer:

The correct answer is False.

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