Hilton Hotels Corp. has a convertible bond issue outstanding. Each bond, with a

Question

Hilton Hotels Corp. has a convertible bond issue outstanding. Each bond, with a face value of $1,200, can be converted into common shares at a rate of 61.2995 shares of stock per $1,200 face value bond (the conversion rate), or $19.5760 per share. Hilton’s common stock is trading (on the NYSE) at $19.16 per share and the bonds are trading at $1,175.

Calculate the conversion value of each bond. (Round your answer to 2 decimal places. (e.g., 32.16))

Calculate the conversion value of each bond. (Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Conversion value of each bond = Current market price osf common stock on the date of conversion * Coversion rate

= $19.16 per share*61.2995

=$1174.49

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