A disadvantage to the investor of a convertible bond is that:

Question

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If interest rates rise, the pure bond value of the convertible bond will decline, resulting in a potential loss for the investor. The other statements are not disadvantages of a convertible bond. A rising share price would actually be beneficial for the investor as it increases the likelihood of conversion and capital gains, the lower interest rate on convertibles is a benefit for the investor, and interest paid on convertibles is not necessarily higher than non-convertibles.

A Disadvantage to the Investor of a Convertible Bond Is