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A convertible bond has a conversion ratio of 18.4. What is the conversion price?

Hannon Home Products, Inc., recently issued \(\$ 2\) million worth of 8 percent convertible debentures. Each convertible bond has a face value of \(\$ 1,000\). Each convertible bond can be converted into 18.5 shares of common stock anytime before maturity. The stock price is \(\$ 38.20\), and the market value of each bond is \(\$ 1,070\). 1\. What is the conversion ratio? 2\. What is the conversion price? 3\. What is the conversion premium? 4\. What is the conversion value? 5\. If the stock price increases by \(\$ 2\), what is the new conversion value?

Survivor, Inc., an all-equity firm, has eight shares of stock outstanding. Yesterday, the firm's assets consisted of nine ounces of platinum, currently worth \(\$ 850\) per ounce. Today, the company issued Ms. Wu a warrant for its fair value of \(\$ 850\). The warrant gives Ms. Wu the right to buy a single share of the firm's stock for \(\$ 1,000\) and can be exercised only on its expiration date one year from today. The firm used the proceeds from the issuance to immediately purchase an additional ounce of platinum. 1\. What was the price of a single share of stock before the warrant was issued? 2\. What was the price of a single share of stock immediately after the warrant was issued? 3\. Suppose platinum is selling for \(\$ 975\) per ounce on the warrant's expiration date in one year. What will be the value of a single share of stock on the warrant's expiration date?

The capital structure of Ricketti Enterprises, Inc., consists of 15 million shares of common stock and 1 million warrants. Each warrant gives its owner the right to purchase one share of common stock for an exercise price of \(\$ 19\). The current stock price is \(\$ 25\), and each warrant is worth \(\$ 7\). What is the new stock price if all warrant holders decide to exercise today?

You have been hired to value a new 25 -year callable, convertible bond. The bond has a 6.80 percent coupon rate, payable annually. The conversion price is \(\$ 150\), and the stock currently sells for \(\$ 35.50\). The stock price is expected to grow at 12 percent per year. The bond is callable at \(\$ 1,150\); but based on prior experience, it won't be called unless the conversion value is \(\$ 1,250\). The required return on this bond is 9 percent. What value would you assign to this bond?