Response to the following questions:
1. Evaluate the following statement: "Issuing convertible securities represents a means by which a firm can sell common stock at a price above the existing market."
2. Why do corporations often sell convertibles on a rights basis?
2. Peterson Securities recently issued convertible bonds with a $1,000 par value. The bonds have a conversion price of $40 a share. What is the convertible issue's conversion ratio?