Which One of the Following Statements About Convertibles Is True

question 76

Multiple Choice

Which one of the following statements about convertibles is true?

• 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) Convertibles are not callable.

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