Answer-first summary for fast verification
Answer: $660.
**Calculation:** - Conversion value = Conversion ratio × Current stock price = 12 × $55 = $660 - Straight bond value = $650 - Minimum value of convertible bond = max(conversion value, straight bond value) = max($660, $650) = $660 **Key Concept:** The minimum value of a convertible bond is the greater of its conversion value and straight bond value. In this case, the conversion value ($660) is higher than the straight bond value ($650).
Author: LeetQuiz Editorial Team
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An analyst gathers the following information about a convertible bond issue:
$60$55$650, the minimum value of this convertible bond is:A
$650.
B
$660.
C
$720.
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