The interest rate on nonconvertibles is generally ____________ the interest rate on similar convertible instruments.

Question

Quizplus · Accepted Answer

The interest rate on nonconvertibles is generally greater than the interest rate on similar convertible instruments because the issuer of nonconvertible instruments does not have to offer the potential conversion premium that convertible securities provide. Therefore, investors require a higher return on nonconvertibles to compensate for the lack of conversion feature.

The Interest Rate on Nonconvertibles Is Generally ____________ the Interest