不理解题意

问题如下：

A corporate bond with face value of $100 is convertible at $40 and the corporation has called it for redemption at $106. The bond is currently selling at $115 and the stock’s current market price is $45. Which of the following would a bondholder most likely do?

选项：

A.

Sell the bond

B.

Convert the bond into common stock

C.

Allow the corporation to call the bond at 106

D.

None of the above

解释：

The conversion rate is expressed here in terms of the conversion price. The conversion rate for this bond is $100 into $40, or 1 bond into 2.5 shares. Immediate conversion will yield $2.5\times\$45=\$112.5$. The call price is $106. Since the market price is higher than the call price and the conversion value, and the bond is being called, the best value is achieved by selling the bond.