Practice Quiz

FINRA Series 6

Category - Series 6

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Steel Dynamics (STLD) has a convertible bond issue that matures in four years. The bond has a face value of $1,000 and pays a coupon of 5.125%, with interest paid semiannually. The conversion ratio is 56.9801.If the stock of Steel Dynamics is currently priced at $15 a share, what is the conversion value of this bond, to the nearest cent?
  1. $854.70
  2. $569.80
  3. $175.50
  4. Until it matures, the conversion value of the bond is equal to its face value of $1,000.
Explanation
Answer: A - The conversion value of this bond $854.70. It is equal to its conversion ratio of 56.9801 times the current market price of its stock, $15. Thus, 56.9801 x $15 = $854.70.
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