A Convertible Preferred Stock Is Similar to a Convertible Bond

question 30

Multiple Choice

A convertible preferred stock is similar to a convertible bond except that:

• A)the conversion ratio is fixed.
• B)the conversion price is fixed.
• C)the time to maturity is infinite.
• D)preferred stock converts to common stock while bonds convert to preferred stock.
• E)preferred stock converts to bonds while bonds convert to common stock.