: An investor owns a bond selling for $5,000. This bond can be converted into 50 shares

Q1: An investor owns a bond selling for $5,000. This bond can be converted into 50 shares of stock that are currently selling for $82 per share. Should the investor convert his bond into shares? Explain why? [1.5 Mark]

Q2: Nadec Company owns 100 million shares and is currently trading at SAR 36 per share. To provide financing for expansion, Nadec decided to give investors exercises right to buy one additional share for every 5 shares owned in a 1:3. How much should each share be worth after the rights issue if they previously sold for SAR 45 each?

[1.5 Mark]

Q3: Briefly explain the difference between Trade-off Theory and Pecking Order Theory?