Concerning Convertible Bonds, Which of the Following Statements Is Not

question 9

Multiple Choice

Concerning convertible bonds, which of the following statements is not correct?

• A) The value of a convertible bond will generally be greater than its straight bond value.
• B) The value of a convertible bond will generally be greater than its conversion value.
• C) The difference between the conversion value and the straight bond value is the conversion or option premium.
• D) The coupon rate on a nonconvertible bond will generally exceed the coupon rate on an otherwise identical convertible bond.

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