Aruna Steel Ltd. issued Bonds with the following terms: Issue price of the Bond: ₹1000 Coupon rate: 3% Maturity: 5 years Convertible into equity shares @ ₹500 per share Ivan had purchased 20 bonds. At the time of maturit

Ivan purchased 20 bonds @ ₹1000 per bond. Total amount invested ₹20,000. He will get interest for 5 years on the date of maturity. After five years, he has the following options: He may claim redemption and get the bonds converted into fully paid equity shares @ ₹500 each. Thus on conversion, he will get 40 equity shares (₹20000/₹500) As the equity shares are also traded in stock exchange, he may buy from market at the prevailing market price of ₹400. Therefore, from the maturity proceed of ₹20000, he can buy 50 equity shares (₹20000/₹400) from the market. It is clear from the above two options; Ivan should choose option (ii) as he will get more equity share than conversion from company.