The Difference Between the Market Value of a Convertible Bond

question 10

Multiple Choice

The difference between the market value of a convertible bond and the higher of its conversion or straight-bond value is the ____ premium.

• A) exercise
• B) investment
• C) conversion
• D) liquidation

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, usually derived from the company's earnings.

U.S. Companies

Businesses that are incorporated, operate, or have their primary base of operations within the United States.

Dividend-Payout Stock

NO. However, the concept closely resembles dividend-paying stocks, which are shares in a company that return a portion of the company's earnings to shareholders at regular intervals.

Transactions Costs

Expenses incurred during the purchase or sale of goods and services, which may include commissions, fees, and other charges.