What is a conversion ratio? A conversion price? A straight-bond value?
What is meant by a convertible’s floor value?
What are the advantages and disadvantages of convertibles to
issuers? To investors?
How do convertibles reduce possible conflicts of interest between
bondholders and stockholders?
A convertible bond has a par value of $1,000 and a conversion price
of $40. The stock currently trades for $30 a share. What are the
bond’s conversion value and conversion ratio at t 0?
