nuttulcom/Shxtentna yet kacox homewortld e 160506991 &questionld; 1 & flushed-ra
ID: 2729379 • Letter: N
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nuttulcom/Shxtentna yet kacox homewortld e 160506991 &questionld; 1 & flushed-rateⅆ:3905752 & centerwn yes&i; Christina Lovering 5/29/16 10:31 AM Overview mework: Assignment 4 D) (3) (6) (7) (a) (b) (10) D>LY P7.4 (similar to) Assignment Score: 0% (0 of 100 pts) oof 10 complete- Exercise Score: 0of10 pts Couvertible preferred stock Valerian Corp. convertible preferred stock has a fixed conversion ratio of 7 common shares per 1 share of preferred stock. The preferred stock pays a dividend of S 10.00 per share per year. The common stock currently sells for $30 per share and pays a dividend of $1.00 per share per year a. hdmg one the basis ofthe conversion mao and the price of the common shares, what is the current conversion value of each preferred share? ), the preferred shares are selling at$214 each, should an investor convert the preferred shares to common shares? c. what factors might cause an investor not to convert from preferred to common stock? a. The current conversion value of each preferred shure is sR Round to the nearest dollar.) Enter your answer n the answer box, then click Check Answer 2 parts remaining Clear All Final Check SaveExplanation / Answer
a)conversion value=conversion ratio*stock price
conversion ratio=7 stock price=30
=7*30=$210
b)the investor should not convert as the price after conversion in $210 which is leeser than current prefered shared price of $214
c)If the price after conversion is leeser than current price then he will not convert
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