The bonds of VDM, Inc. are convertible into shares of the firm's common stock at $50 per share. The current price of the common stock is $45 per share. The bonds have a $1,000 par value and currently sell for $950 apiece. When the bonds were issued, the market price of the common stock was $40. What is the conversion value of these bonds?

A) $800
B) $875
C) $900
D) $950
E) $1,000

Par Value

The face value of a bond or stock, as stated by its issuer, which is the nominal value and does not necessarily reflect its market value.

Conversion Value

The value of a convertible security if it is converted into a specified number of shares of the issuing company.

Common Stock

Equity ownership in a corporation, with voting rights and the potential for dividends and capital appreciation.