Concerning Convertible Bonds, Which of the Following Statements Is Not

question 49

Multiple Choice

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

• A)With regard to security, most convertible bonds are secured by ordinary equity (i.e., they
• Are collateral trust bonds).
• B)For most convertible bonds, the issuing firm can, under certain circumstances, effectively
• Force bondholders to convert to ordinary equity.
• C)When a convertible bond is called, the owner has the option of receiving cash or equity for
• The bond.
• D)The bond ratings of firms using convertibles are lower than those of other firms.
• E)All of the above are incorrect.

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Definitions:

Assets Due

Typically refers to amounts or assets scheduled for receipt or payment within a predefined period; however, "Due" often relates to liabilities (e.g., accounts payable). NO precise term called "Assets Due" in standard financial terminology without further context.

90-Day Note

A short-term debt instrument that matures in 90 days, typically used for financing immediate needs.

360-Day Year

The 360-day year is used in financial calculations to simplify interest calculations, assuming each month has 30 days.

Maturity Value

The total amount payable to an investor at the end of a fixed term investment, including the principal and any accrued interest.