Essentially, a convertible bond is a portfolio of:
a. a bond and an automobile whose top can be removed.
b. an otherwise equivalent nonconvertible bond and shares of the issuing firm's stock.
c. an otherwise equivalent nonconvertible bond and a call option on the firm's stock.
d. an otherwise equivalent nonconvertible bond and a put option on the firm's stock.
C
You might also like to view...
In accounting, depreciation refers to the decline in fair value of a plant asset
Indicate whether the statement is true or false
If Standard & Poor's ratings of a firm's bonds is below BBB, the _____.
A. firm will find it difficult to find potential investors when issuing new bonds B. default risk premium associated with the bonds will be less than the risk premium associated with bonds rated AAA C. firm will easily find investors when issuing new bonds because bonds with high yields have no risk associated with them D. default risk associated with the bonds is less than that of bonds that are rated AAA E. firm will immediately have to exercise the call provision and issue new bonds
Which of the following statements is true concerning problem identification?
A. Problems are generally obvious. B. A symptom and a problem are one and the same. C. Generally, what is a problem for one manager is a problem for all other managers. D. Effectively identifying problems is not easy.
On January 2, 20X8, Polaris Company acquired a 100% interest in the capital stock of Ski Company for $3,100,000. Any excess cost over book value is attributable to a patent with a 10-year remaining life. At the date of acquisition, Ski's balance sheet contained the following information: Foreign CurrencyUnits (FCU)Cash 40,000 Receivables (net) 150,000 Inventories (FIFO) 500,000 Plant and Equipment (net) 1,500,000 Total 2,190,000 Accounts Payable 200,000 Capital Stock 600,000 Retained Earnings 1,390,000 Total 2,190,000 Ski's income statement for 20X8 is as follows: Foreign CurrencyUnits (FCU)Revenues from Sales 1,010,000 Cost of Goods Sold (590,000) Gross Margin 420,000 Operating Expenses (exclusive of
depreciation) (120,000) Depreciation Expense (200,000) Income Taxes (40,000) Net Income 60,000 The balance sheet of Ski at December 31, 20X8, is as follows: Foreign CurrencyUnits (FCU)Cash 180,000 Receivables (net) 210,000 Inventories (FIFO) 520,000 Plant and Equipment (net) 1,300,000 Total 2,210,000 Accounts Payable 180,000 Capital Stock 600,000 Retained Earnings 1,430,000 Total 2,210,000 Ski declared and paid a dividend of 20,000 FCU on October 1, 20X8. Spot rates at various dates for 20X8 follow: January 21 FCU=$1.50 October 11 FCU=$1.60 December 311 FCU=$1.70 Weighted Average1 FCU=$1.55 ?Assume Ski's revenues, purchases, operating expenses, depreciation expense, and income taxes were incurred evenly throughout 20X8.Refer to the above information. Assuming Ski's FCU is the functional currency, what is the amount of translation adjustment that appears on Polaris's consolidated financial statements at December 31, 20X8? A. $405,884 debit B. $398,500 credit C. $419,184 credit D. $416,884 credit