Multiple Choice Question Assume a $1,000 debenture with a conversion price of S50....
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Finance
Multiple Choice Question
Assume a $1,000 debenture with a conversion price of S50. The company has 1,000 shares outstanding of common stock with a current market price of $50, which is also the price at the record date. The company issues 200 new shares of common stock at $40 per share. The debenture has a conversion price adjustment mechanism that fully protects the bondholder's rights in the event of a dilutive common stock offering. What should be the new adjusted conversion price (to the nearest cent, e.g., "S00.00") (please note that due to rounding to the nearest tenth of a decimal, the answer may be a few cents off from the precise answer; please provide the most correct answer from the choices below)? What is the new conversion ratio (to the nearest one hundredth in decimal, e.g. "00.00")? A. Adjusted conversion price -$48.87 Conversion ratio 20.96 . Conversion ratio 22.65 Conversion ratio 19.79 .. Conversion ratio 20.51 Conversion ratio - 20.69 B. Adjusted conversion price 47.45 C. Adjusted conversion price- $48.52 D. Adjusted conversion price $51.33 E. Adjusted conversion price -$48.33
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