Answer:
II The conversion ratio is 25:1
Explanation:
the options were missing:
I The conversion ratio is 20:1
II The conversion ratio is 25:1
III The parity price of the stock is $44
IV The parity price of the stock is $50
the conversion ratio gives us the total number of stocks that can be converted. In this case, the conversion ratio = 25, since $1,000 (par value) / $40 per stock = 25 stocks
Since the bond's price increases by 5%, it will be $1,050 / 25 stocks = $42, so the stock's price parity = $42
