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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Definitions:

Vestibular Sense

The sensory system that contributes to balance and spatial orientation.

Olfactory Sense

The sensory system responsible for the sense of smell.

Gustation

The sense of taste, which is one of the five traditional senses, involving the perception of taste or flavor from the consumption of substances.

Pain

An unpleasant sensory and emotional experience associated with actual or potential tissue damage, or described in terms of such damage.