Concerning Convertible Bonds, Which of the Following Statements Is Not

question 16

Multiple Choice

Concerning convertible bonds, which of the following statements is not correct?

• A)A convertible bond issue would generally have fewer restrictive covenants than an
• Otherwise identical nonconvertible bond.
• B)Convertible bonds can be issued at a lower coupon compared with otherwise non-
• Convertible bonds.
• C)If the value of a convertible bond exceeds the maximum of its straight bond value or its
• Conversion value, the difference would be referred to as the option value.
• D)Since convertible bonds will be exchanged for ordinary equity, convertible bonds are
• Generally not callable.
• E)None of the above is incorrect.

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