Which of the Following Is Most Likely to Happen with a Convertible

question 82

Multiple Choice

Which of the following is most likely to happen with a convertible bond when the market price of the stock exceeds the conversion price? The stock does not pay a dividend.

• A) The bondholders will immediately convert their bonds to stock.
• B) The issuing company will call the bonds and the bondholders will redeem them for the call price.
• C) The issuing company will call the bonds and bondholders will convert them to common shares.
• D) Both the issuing company and the bondholders will wait for the bonds to reach their maturity date.

---

Definitions:

Aversive Conditioning

A behavioral training process that uses negative stimuli to reduce the occurrence of certain undesirable behaviors.

Smoking

The act of inhaling and exhaling the smoke of tobacco or a drug, which can lead to health issues and addiction.

Cognitive Therapies

Treatments emphasizing that cognitions (thoughts) are the main source of psychological problems; therapies that attempt to change the individual’s feelings and behaviors by changing cognitions.

Psychological Problems

Issues or disturbances in mental health or behavior patterns that may impact one's ability to function normally in everyday life.