Since the Conversion Feature Provides the Purchaser of a Convertible

question 161

True/False

Since the conversion feature provides the purchaser of a convertible bond with the possibility of becoming a stockholder, convertible bonds are a less expensive form of financing than similar-risk nonconvertible or straight bonds.

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Definitions:

Opportunity Cost

The value of the best alternative forgone where a choice needs to be made between several mutually exclusive alternatives.

Aggregate Income

The total amount of income earned by all individuals or entities within an economy.

World Economy

The global network of economic activities, trade, and production that transcends national borders, involving various economies of the world.

Private Sector

The part of the economy that is run by individuals and companies for profit and is not state controlled.