If the Stock Price Rises Substantially Above the Conversion Price

question 13

Multiple Choice

If the stock price rises substantially above the conversion price, an advantage to the corporation would be that

• A) the premium would decrease.
• B) the floor price would offer the investor downside protection.
• C) the bond would most likely be converted into common stock and the debt would not have to be repaid.
• D) None of these options are advantages to the corporation.

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Definitions:

Inventory

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