All of the Following Are Normal Characteristics of a Convertible

question 64

Multiple Choice

All of the following are normal characteristics of a convertible bond,except

• A) Conversion at the option of the issuer.
• B) Conversion into a fixed number of shares of common stock.
• C) A conversion price initially above the market price of the common stock.
• D) An interest rate lower than that on straight debentures.
• E) Subordination.

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable production costs have been deducted, contributing to covering fixed costs.

Controllable Margin

The portion of operating income that can be directly controlled or influenced by managers at certain levels of an organization.

Operating Assets

Assets directly involved in the manufacturing or sale of products or services in the normal course of business.

Return on Investment

A measure of the profitability of an investment, calculated as the net profit of the investment divided by the initial cost.