Hi…there’s an error in the answer choices. It listed the answer twice.
Here’s the link:
https://app.achievable.me/study/finra-series-7/review
Hi…there’s an error in the answer choices. It listed the answer twice.
Here’s the link:
https://app.achievable.me/study/finra-series-7/review
Thank you, I’ve corrected this!
Hi…either I’m confused or there’s a couple of spell checks error on conversion features of convertibe bonds and common stocks…
Heres the link to that section:
https://app.achievable.me/study/finra-series-7/learn/corporate-debt-products-convertible-bonds
Hi @LASHY1980! While convertible preferred stock and convertible bonds are very similar, there were a few typos in this section. Where we mentioned preferred stock, it should have said ‘bond.’ These have been updated immediately.
Thanks for pointing this out!
Oh ok. I was getting confused because they preferred stock and convertible bonds are so similar.
I have 2 questions…if you can clarify.
new conversion ratio for convertible pref. stock = current conv.ratio x SS factor or SD factor
new conversion ratio for convertible bonds = current conv.ratio x SS factor or SD factor
Question 2:
Is the formula for Parity Pricing of Preferred Stock and Bond Parity Pricing the same? ( = common stock price x conv. ratio)
Question 1
You’ve got it for the most part. Here’s what you’ll need to adjust:
New conversion price on pref. stock.= original conversion price / SS factor or SD factor
New conversion price for convertible bond = original conversion price / SS factor or SD factor
You’ll want to use the original conversion price (not the market price) for anti-dilution questions involving changing conversion prices or conversion ratios.
Question 2
Yep! You got it!
Perfect! Thanks Brandon!