Which of the Following Characteristics Are Drawbacks of Convertible Bonds

question 104

Multiple Choice

Which of the following characteristics are drawbacks of convertible bonds?

• A) Downside protection is ineffectual if the bond is bought at a large premium over floor value.
• B) Interest rates on the debt-instrument part of a convertible bond are frequently below market interest rates.
• C) Conversion may be forced on the bondholder by call provisions on the convertible bond.
• D) All of these options are drawbacks of convertibles.

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