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3. A holder of Rainbow Funds convertible bonds have a $1.000 par and sell at par. The bonds can be convert to 25 shares of co
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Answer #1

Conversion Ratio = 25

Par Value of bond = $1000

Conversion Price = Par Value of Bond / Conversion Ratio = 1000/25 = $40

Hence, the minimum stock price to be willing to convert is $40

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