ou are the CFO of RealNetworks on July 1, 2008. The company's stock price is...
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ou are the CFO of RealNetworks on July 1, 2008. The company's stock price is $9.74 and its convertible debt is now callable. See the table below:
| Convertible Subordinated Notes | |
| Issued under U.S. SEC Rule 144A | |
| Aggregate principal amount | $100 million |
| Proceeds net of offering costs | $97.0 million |
| Coupon | 0% |
| Conversion ratio | 107.5650 shares per $1,000 principal amount |
| Call date | July 1, 2008 |
| Call price | 100% |
| Maturity | July 1, 2010 |
a. What is the value of the shares the bondholders would receive per $1,000 bond if they convert?
b. What is the value per $1,000 bond they would receive under the call?
c. If you call the bonds, will the bondholders convert into shares or accept the call price?
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