A firm issues the convertible debt shown above. The price of stock in this company on July 1, 2008 is $37.57. What is the minimum call price that would make a bondholder prefer to accept the call rather than convert?
Coupon 0%
Conversion Ratio: 286 shares per $10,000 principal amount
Call Date: July 1, 2008
Maturity: July 1, 2015
A) par
B) par plus 7.5%
C) par plus 9.7%
D) par plus 11.2%
Answer: B
Business
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