Which One of the Following Statements About Convertibles Is False

question 4

Multiple Choice

Which one of the following statements about convertibles is false?

• A)The longer the call protection on a convertible,the less the security is worth.
• B)The more volatile the underlying stock,the greater the value of the conversion feature.
• C)The smaller the spread between the dividend yield on the stock and the yield-to-maturity on the bond,the more the convertible is worth.
• D)The collateral that is used to secure a convertible bond is one reason convertibles are more attractive than the underlying stock.
• E)A,C and D.

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Definitions:

Compete Effectively

The ability of a company or entity to develop and implement strategies that secure an advantage over its competitors in a market.

Low-Opportunity Cost Producer

An individual or company that can produce goods or services at a lower opportunity cost than competitors.

High Opportunity Cost

The significant loss of potential gain from other alternatives when one option is chosen.

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The transfer of commodities, services, and finance across the borders or territories of various nations.