When the Conversion Value of a Convertible Bond Exceeds the Call

question 41

True/False

When the conversion value of a convertible bond exceeds the call price of the bond, the issuing company is likely to force conversion by calling the bonds.

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Definitions:

Hydrocele

A fluid-filled sac surrounding a testicle, often leading to swelling of the scrotum.

Scrotum

In a male, the sac of skin below the pelvic cavity that contains the testes.

Fluid

A substance that has no fixed shape and yields easily to external pressure; can be a liquid, gas, or plasma.

Menopause

The time in a woman's life marking the end of her menstrual cycles, typically occurring 12 months after her last period.