Co-Op Ltd Issues Converting Preference Shares with a Face Value

Co-op Ltd issues converting preference shares with a face value of $15,which convert to ordinary shares on 30 June.The conversion ratio is determined by dividing the face value of the preference share by an amount equal to the price of Co-op ordinary shares on 30 June,less 10 per cent.If the market value of ordinary shares on the conversion is $5.35,at what value will each preference share convert into ordinary shares?

A) $15.00
B) $16.67
C) $5.35
D) $13.50

Correct Answer:

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