Which of the Following Statements About Bonds That Are Both

question 67

Multiple Choice

Which of the following statements about bonds that are both convertible and callable is NOT true?

• A) If these bonds are called by the issuer, the holder can choose to convert them rather than let them be called.
• B) Prior to maturity, the value of such bonds will be greater than the shares of stock that bond can be converted into.
• C) The decision to be made by the bondholders when the bonds are called is the same as they would have to make at maturity.
• D) By calling the bonds, the issuer can force bondholders to decide to convert at a time of the issuer's choice.

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Definitions:

Equity Method

An accounting technique used by companies to assess the profits earned through their investments in other companies.

Fair Value

The remuneration for divesting an asset or the compensation needed to transfer a liability in an orderly market exchange at the calendar mark for assessment.

Temporary Decline

A short-term decrease in the value or performance of an asset or market, expected to recover over time.

Voting Common Stock

Shares that give the holder the right to vote on corporate matters.