You own a bond with a face value of $1000 and a conversion price of $40.The conversion ratio is closest to:
A)15.
B)20.
C)25.
D)40.

Question

Quizplus · Accepted Answer

The conversion ratio is the number of common shares that can be obtained by converting one bond. It is calculated by dividing the face value of the bond with the conversion price.

Conversion ratio = Face value / Conversion price
Conversion ratio = $1000 / $40
Conversion ratio = 25

Therefore, the conversion ratio is closest to 25, and the best choice would be C).

You Own a Bond with a Face Value of $1000