To find the conversion price of a convertible bond, what must the bond's par value be divided by?

The conversion price of a convertible bond is determined by dividing the bond's par value by the conversion ratio. The conversion ratio is the number of shares of stock that a bondholder can receive for each bond upon conversion. By using the par value, which represents the face value of the bond, and dividing it by this conversion ratio, you obtain the price at which the bond can be converted into shares.

This concept is central to understanding convertible bonds because it allows investors to evaluate the potential value of converting their bonds into equity. If the conversion ratio is high (meaning the bond converts into a larger number of shares), the conversion price will be lower, indicating a potentially more favorable situation for the bondholder when considering conversion against the current market price of the underlying shares.

The other options focus on different bond characteristics that do not relate directly to calculating the conversion price. For instance, the total number of bonds outstanding does not influence the conversion price directly; it only provides context about the overall market for the bonds. Similarly, the coupon rate and yield-to-maturity pertain to the bond's interest payments and overall return to investors but are not used to determine the conversion price.