- This topic has 1 reply, 2 voices, and was last updated 3 months, 2 weeks ago by .

Viewing 2 posts - 1 through 2 (of 2 total)

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.

OpenTuition.com Free resources for ACCA and CIMA students

Free ACCA and CIMA on line courses | Free ACCA, CIMA, FIA Notes, Lectures, Tests and Forums

Home › Forums › Ask CIMA Tutor Forums › Ask CIMA F2 Tutor Forums › Chapter 3 Illustration 3/pg 61 study text Kaplan compund instrument

- This topic has 1 reply, 2 voices, and was last updated 3 months, 2 weeks ago by P2-D2.

Viewing 2 posts - 1 through 2 (of 2 total)

- AuthorPosts
- March 17, 2020 at 5:35 pm

auraParticipantCan you help me understand what is the logic behind the calculation in the 3rd step (conversion of the bond) in Illustration 3/page 64 study text kaplan- they say like this:

“the conversion terms sre two 25c shares for every $1, so $50m x 2 = $100 m shares which have a nominal value of $25m” why do they multiply with 2 and not with 2.25 ? How they get to $25m nominal value?

thanks a lot.March 19, 2020 at 9:34 am

P2-D2KeymasterHi,

It is a bit confusing but I’d think of it as follows:

Two shares are issued for every $1 owed – so $50m is owed so we will issue 100 million shares ($50m/$1 x 2 shares).

Each share has a nominal value of 25c – so the nominal value of the 100 million shares issued is $25 million (100 million shares x $0.25 nominal value)

Hope that clears it up for you.

Thanks

Chris

- AuthorPosts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.

We use cookies to improve your experience on our site and to show you relevant advertising. To find out more, read our updated privacy policy and cookie policy.OkRead more