Which of the Following Statements Is FALSE

question 23

Multiple Choice

Which of the following statements is FALSE?

• A)A convertible bond can be thought of as a regular bond plus a special type of call option called a warrant.
• B)On the maturity date of the bond,the strike price of the embedded warrant in a convertible bond is equal to the face value of the bond divided by the conversion ratio-that is,the conversion price.
• C)Calling a convertible bond transfers the remaining time value of the conversion option from shareholders to bondholders.
• D)If the stock price is low so that the embedded warrant is deep out-of-the-money,the conversion provision is not worth much and the bond's value is close to the value of a straight bond-an otherwise identical bond without the conversion provision.

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Definitions:

Double Blind Procedure

A research method in which both the participants and the experimenters are unaware of who is receiving a particular treatment, used to prevent bias in experimental results.

Single Blind Procedure

A research design in which participants are unaware of whether they are in the experimental or control group, but the researchers know.

Neutral Sample Procedure

A method in research where the sample is selected without bias towards any outcome or hypothesis.

Blind Sample Procedure

An experimental technique in which information about the test samples is kept from the participants to prevent bias in the results.