a.

$.75

4. A convertible bond is currently selling for $11 335. It is convertible into 20 shares of common stock that presently sell for $56 per share. What is the conversion premium?

__a. $335

b.

$215

c.

66.74 shares

d.

23.8 shares

b.

$7.50

c.

$15

d.

$0

13. Jacobs and Company has warrants outstanding, which are selling at a $3 premium above intrinsic value. Each warrant allows its owner to purchase one share of common stock at $25. If the common stock currently sells for $28, what is the warrant price?

a. $6

b. $10

__c.

$12

__d.

$14

12. Vickrey Technology has had net income of $2,000,000 in the current fiscal year. There are 1,000,000 shares of common stock outstanding along with convertible bonds, which have a total face value of $8 miIJion. The $8 million is represented by 8,000 different $1,000 bonds. Each $1,000 bond pays 3 percent interest. The conversion ratio is 30. The firm is in il 30 percent tax bracket. What is Vickrey's diluted earnings per share?

a.

$1.75

b.

$1.81

c.

$2.00

d.

None of the above

11.Mirrlees Corp. has 10,000 6.25 percent bonds convertible into 40 shares per $1000 bond. Mirrlees has 600,000 outstanding shares. Mirrlees has a tax rate of 40 percent. The average Aa bond yield at time of issue was 10 percent. Compute basic earnings per share if ilfter-tax earnings are $750,000.

a. $0.71

b. $1.25

__c. $1.33

__d. $1.51

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