The Difference Between the Conversion Price of a Convertible Bond

question 442

Multiple Choice

The difference between the conversion price of a convertible bond and the current stock price, divided by the current stock price, is called the _______________.

• A) Conversion premium.
• B) Straight bond value.
• C) Conversion value.
• D) Conversion price.
• E) Conversion ratio.

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Definitions:

AVC

Average Variable Cost, which is the variable cost per unit of output, including costs that change with production volume.

ATC

Average Total Cost (ATC) refers to the total cost per unit of output, calculated by dividing the total cost by the quantity of output produced.

Economic Loss

The difference between the revenues received from the sale of an output and the opportunity cost of the inputs used.

Average Variable Cost

The variable cost per unit of output, obtained by dividing the total variable cost by the total output.