The bond issues of five corporations, de designated by the letters A to E, are c

Question

The bond issues of five corporations, de designated by the letters A to E, are convertible into their respec stocks at the ratios and prices indicated in the All the comson stocks are affected by splIL-UPS of stock dividends as described in the table, s with antidilution provisions in the bond indenu prices and ratios aust be changed proportionate be the levels of the nev conversion ratios orP five bond issues? folloving table. that in accordance cely.What vould prices for the CHANGE IN COMMON STOCK CONVERS1ON CONVERSION RATIO CORPORATE PRICE $65 4 2 22 Stock Dividend. 4 For 3 Split-up 2.5 Shares 5 for Sp11t-up 3 Shares 100% Stock Dividend 18 50% Stock Dividend

Explanation / Answer

Assuming a par value of $1000

Conversion ratio= Par value/Conversation price of equity

A- conversion ratio=1000/65=15.38

B- conversion ratio=1000/42=23.80

C- conversion price=1000/2.5=400

D- conversion price=1000/3=333.33

E- conversion ratio=1000/18=55.55

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