Maple Aircraft has issued a 4 3/4% convertible subordinate debenture due in 2014. The conversion price is $47.00 and the debenture is callable at 102.75% of face value. The market price of the convertible is 91% of face value, and the price of common is $41.50. Assume the value of the bond in the absence of a conversion feature is about 65% of face value.
A. what is the conversion ratio of the debenture?
B. If the conversion ratio were 50, what would be the conversion price?
C. What is the conversion value?
D. At what stock price is the conversion value equal to the bond?
E. How much is the convertible holder paying for the option to buy one share of common stock?
F. When should Maple Aircraft call the debenture?