Name: 
 

CHAPTER 17: MANAGING DOMESTIC RISK


Short Answer
 

 1. 
Canadian Cruise Lines’ convertible debenture has a conversion prices of $40.  If the face value of the debenture is $1,000, what is the conversion ratio?
 

 2. 
Brighton Books has a convertible debenture maturing in 4 years, which can be converted into 50 common shares at anytime.  The annual coupon is $62.50.  If the company’s shares are currently trading at $16 and the appropriate discount rate is 8.5%, what is the lowest price the debenture should be trading at?
 

 3. 
Canadian Mercantile has just announced a rights offering for shareholders.  For every six rights, a shareholder can purchase a new share for $18.00.  If the current share price is $21.50, what is the value of the rights?
 



 
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