Why Should a Convertible Bond Always Be Valued at More

question 87

Multiple Choice

Why should a convertible bond always be valued at more than its bond value or its conversion value up until maturity?

• A) The bond holder is receiving higher interest rates.
• B) The holder can decide later whether to own the bond or the stock.
• C) The conversion ratio may be decreased.
• D) The bond does not have to be given up to exercise the option.

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