Ask Question
4 November, 04:02

A corporation has issued $100 par, 8% cumulative convertible preferred stock, callable at par. The preferred is convertible into 1.4 shares of common stock. Currently, the preferred stock is trading at $102 while the common stock is trading at $75.50. The corporation calls the preferred stock at par plus accrued dividends of $2 per share. The corporation is making n (n):

a. tender offer

b. forced conversion

c. advance refunding

d. simultaneous transaction

+1
Answers (1)
  1. 4 November, 05:59
    0
    C. Advance Refunding

    Explanation:

    Advance refunding is the situation that involves issuance of new bonds to repay issued bonds previously owed. Advance refunding is only possible after ninety days have elapsed. The major aim of advance refunding is towards reducing the issuer's debt. In the case of this question, the preferred shares can be converted to common shares. This is done in order to pay previously owed issued bonds.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “A corporation has issued $100 par, 8% cumulative convertible preferred stock, callable at par. The preferred is convertible into 1.4 shares ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers