From the Bondholder's Point of View,the Optimum Time to Convert

question 15

Multiple Choice

From the bondholder's point of view,the optimum time to convert a convertible bond is when the bond's conversion value is:

• A)less than the call price,but greater than the face value.
• B)greater than the call price,but less than the straight debt's value.
• C)equal to the face value.
• D)less than the straight debt's value,but greater than the call price.
• E)greater than the both the call value and straight bond value on the call date.

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Definitions:

Marginal Cost

Marginal cost refers to the expense of producing one additional unit of a product or service, indicating the efficiency of production processes.

Average Variable Cost

Average variable cost is the total variable costs of production divided by the number of units produced, indicating the average cost of producing each unit excluding fixed costs.

Average Total Cost

The total cost of production divided by the total quantity produced, indicating the cost per unit of output.

Marginal Cost

A measure of the expense associated with manufacturing an additional item of a particular good.