Concerning Convertible Bonds, Which of the Following Statements Is Not

question 30

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.
• E)All of the above are correct.

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Definitions:

S Corporation

A special designation that allows corporations to pass income directly to shareholders and avoid double taxation.

Partnerships

A business structure where two or more individuals manage and operate a business in accordance with the terms and goals set out in a partnership agreement.

Revised Model Business Corporation Act (RMBCA)

A set of laws proposed to standardize the regulation of corporations in the United States, offering a template for state legislatures.

Incorporators

Individuals who participate in the creation of a corporation by preparing, signing, and filing its articles of incorporation with the relevant state authority.