conversion premium
QUESTION
A convertible bond is currently selling for $855. It is convertible into 15 shares of Capri INC. common which presently sell for $63 per share. The conversion premium is?
Conversion Premium: The amount by which the price of a convertible security exceeds the current market value of the common stock into which it may be converted. Current Selling Price of Convertible bond = $855 Convertible Common Shares = 15 shares Current Selling Value of covertible common
s = $63 per share Total Value of Convertible Common Shares = [15 shares * $63 per share] Total Value of Convertible Common Shares = $945 Conversion Premium = [$855 $945] Conversion Premium = -$90
ANSWER:
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