Questions from Corporate Finance

Q: Calculate the conversion price and conversion value of the convertible bonds given

Calculate the conversion price and conversion value of the convertible bonds given the following: selling price $102; each bond is convertible into 5 common shares; current common share price $18. Wil...

Q: Jack and Jill Inc. very nearly tumbled into bankruptcy last year

Jack and Jill Inc. very nearly tumbled into bankruptcy last year. To refinance the firm, the firm issued $30 million worth of 30‐year income bonds. These bonds have an 8‐percent coupon that is payable...

Q: In December 2015, Collingwood Corp. decided to issue 100,

In December 2015, Collingwood Corp. decided to issue 100,000 convertible bonds, maturing in December 2025. The bonds have a face value of $1,000 and promise an annual coupon payment of 5.75 percent. T...

Q: Calculate the payoff of fully exercising warrants given the following: 950

Calculate the payoff of fully exercising warrants given the following: 950,000 existing shares are outstanding; 150,000 warrants are outstanding and are exercisable at $10. The firm is valued at $10 m...

Q: Orion’s Belt Mining Co. has 12 million common shares outstanding,

Orion’s Belt Mining Co. has 12 million common shares outstanding, which are currently trading for $5. In addition, the company has issued two million share purchase warrants with a strike price of $4....

Q: A firm’s common shares currently trade at $20 per share.

A firm’s common shares currently trade at $20 per share. The firm has warrants outstanding that entitle the holder to purchase two shares at an exercise price of $18 per share. The expiry date is two...

Q: Straight preferred shares issued by a firm have a discount rate of

Straight preferred shares issued by a firm have a discount rate of 8 percent per year, whereas these shares are yielding 4 percent on the $25 par value. The conversion value of these shares is calcula...

Q: Montreal Brewers is going to issue $100 million of 90‐

Montreal Brewers is going to issue $100 million of 90‐day commercial paper for net proceeds of $99 million. Montreal Brewers must maintain a $100 million credit line, on which it must pay a standby fe...

Q: A firm has just issued convertible preferred shares with a $100

A firm has just issued convertible preferred shares with a $100 par value. The conversion price for these shares is $20 (per common share). What is the conversion ratio?

Q: A firm has just issued convertible preferred shares with a call feature

A firm has just issued convertible preferred shares with a call feature that permits the firm to repurchase the shares at par value (or, in effect, force the conversion into common shares). Usually, t...