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?
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?
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?
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.
Again there is some confusion concerning Question 4:
15. Sen Corporation warrants carry the right to buy 10 shares of Sen common stock at
$3.50 per share. The common stock has a current market price of $4.25 per share.
What is the intrinsic, or...