Response to the following problem:
Doppleganger, Inc. bonds have a maturity value of $1,000 each and are convertible into common shares at $50 per share. At issuance, the bonds were sold for $1,000 each.
a. What is the stated conversion price?
b. What is the conversion ratio for these bonds?
c. If the common stock is trading for $60 a share, what is the conversion value of the bonds?
d. If the common stock is trading for $40 a share, what is the conversion value of the bonds?
e. If the bonds are trading at 110, what is the market conversion price?