The Value of a Convertible Bond Is Always Less Than

question 71

True/False

The value of a convertible bond is always less than the value of a straight bond with similar coupon and maturity.

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Definitions:

March Put

A put option contract with a expiration date in March, allowing the holder to sell an asset at a pre-specified price.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase a stock, commodity, or other asset at a specified price within a specified time.

Exercise Price

The predetermined price at which the holder of an option can buy (call) or sell (put) the underlying security or commodity.

Put Option

A financial contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price before or on a specified date.