problem1: Reading Railroad's common stock is currently priced at $30, and its 8 percent convertible debentures (issued at par or $1,000) are priced at $850.  Each debenture can be converted into 25 shares of common stock at any time before 2005. find out the conversion price, CP, & the conversion value of the bond?

[A]      $40.00; $ 750

[B]      $40.00; $ 850

[C]      $40.00; $1,000

[D]      $25.00; $1,000     

[E]      $25.00; $ 750        

problem2: B&O Railroad's convertible debentures were issued at their $1,000 par value in 1993.  At any time prior to maturity on February 1, 2013, a debenture holder can exchange a bond for twenty-five shares of common stock.  What is the conversion price, Pc?

[A]      $   40

[B]      $1,025

[C]      $   50

[D]      $   25

[E]      $1,000