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Quiz 22
Quiz 22
Multiple-Choice Quiz
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1. A $500 par-value convertible debenture is selling at $520. If the conversion ratio is 20, what is the
conversion price?
$19.23
$20.18
$25.00
$26.00
2. A company has just issued convertible bonds with $1,000 par value and a conversion ratio of 40. Which
of the following is most likely to be the market price per share of the company's common stock at present?
Under $25.
$25.
Above $30.
3. If a warrant carries a right to buy one share of common stock and is exercisable at $20 per common
share while the market price of a share is $30, the theoretical value of the warrant is:
$20.
$10.
$5.
$0.
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9/30/23, 12:47 AM Chapter 22 Multiple-Choice Quiz
4. An exchangeable bond:
can be exchanged for another bond of a different company.
equal to the face value of the bond divided by the conversion ratio.
6. A(n) is a bond that may be exchanged for common stock of the same corporation.
exchangeable bond
debenture
convertible bond
warrant
short-term; bonds
long-term; bonds
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9/30/23, 12:47 AM Chapter 22 Multiple-Choice Quiz
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