02 Debt - Conversion Flashcards by Brandy S | Brainscape

Q

Converting a bond

tax implication

A

bond converting to stock

non taxable

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Q

inverse conversion

A

issuer right to convert

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Q

Conversion Ratio

A

1 bond will convert to # number of shares

No. Shares : 1 bond

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Q

Conversion Ratio?

Conversion Price $40

A

Ratio = Par / Price

1000 / 40 = 25

25:1

1 bond can be converted to 25 shares of stock

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Q

Parity

A

equal $ value

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Q

Parity Price?

conversion price $20

trading @ 115

A

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Q

Anti Dilution

on stock split or DIV available on conversion

Shares

Conversion Price

A

Shares - increases

Conversion Price - decreases

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Q

Bond Interest

is calculated on which

Preimum, Par, or Discount ?

A

if bond is selling at DIS or PRE still

calculate on par or amt invester owns

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Q

Mkt Price if Call Announced

A

will fall to call price

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Q

Conversion Bond

mkt val of bond?

$50 selling @ 105% parity

stock current mkt val $45

A

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Q

Conversion Bond

parity price of bond?

$50 selling @ 105% parity

stock current mkt val $45

A

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