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:

China

A country in East Asia, the world's most populous nation, with a long history, rich culture, and significant global economic influence.

Overall

Encompassing everything or in general; a term not specific to economics but often used to imply a holistic or comprehensive perspective.

Substantially

To a great or significant extent, often used to signify the importance, size, or degree of something.

Positive Trade Balance

A situation where the value of a country's exports exceeds the value of its imports, also known as a trade surplus.