PDQ Corporation has a 6-1/4% convertible preferred stock (conversion ratio of 4) outstanding. The stock has an antidilution covenant. If PDQ declares a 10% stock dividend, the antidilution covenant will adjust:
A) the conversion price to $27.50.
B) the conversion price to $22.72.
C) the par to $110.
D) the par to $90.
Answer: B) the conversion price to $22.72.