In General, a Bondholder Should Convert a Convertible Bond

question 39

Multiple Choice

In general, a bondholder should convert a convertible bond:

• A) As soon as possible.
• B) When the conversion price is above the intrinsic bond value.
• C) The latest it possibly can.
• D) Immediately after the next coupon payment is made when the conversion price is greater than the straight bond value.
• E) None of the above.

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Definitions:

Niche-Market Approach

A marketing strategy that targets a specific, well-defined segment of the market.

Market Segmentation

A strategy whereby a firm divides the total market into groups of people who have relatively similar product needs.

Market Positioning

The process of establishing the image or identity of a brand or product so that consumers perceive it in a certain way relative to competitors.