A Step-Up in the Conversion Price Refers To

question 47

Multiple Choice

A step-up in the conversion price refers to:

• A) the ability of the company to step up the maturity of the bond to an earlier date.
• B) the provision that increases the conversion ratio the longer a convertible bond is held.
• C) a refunding of a convertible bond when the conversion value equals the pure bond value.
• D) the holder may pay a progressively higher option price if he or she does not exercise by a given date.

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Definitions:

EFN

Expected Funds Needed, an estimation of the additional financing a company will require in the future based on its projected growth and existing financial structure.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales and earnings without increasing leverage or debt financing.

Leverage Ratios

Financial metrics that assess the level of debt in a company's capital structure relative to its equity or assets.

Dividend Policy

A company's approach to distributing profits back to its shareholders, whether through cash dividends, stock dividends, or share repurchase plans.