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A Convertible Bond

Question 37

Multiple Choice

A convertible bond:


A) generally has fewer restrictive covenants than an otherwise identical nonconvertible bond.
B) is generally issued with a higher coupon than a comparable non-convertible bond.
C) provides a greater benefit to its issuer than a straight bond if the underlying stock price rises in the future.
D) retains its option value even after the bond matures.
E) tends to increase agency costs.

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