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A Disadvantage to the Investor of a Convertible Bond Is

Question 60

Multiple Choice

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


A) the share price may never rise above conversion price.
B) if interest rates rise,the pure bond value (floor price) will rise.
C) the interest rate on convertibles is generally half the coupon rate on straight bonds of similar risk.
D) if stock price rises above the conversion price,the firm could raise the capital needed by issuing fewer shares than those sold from the conversion of the securities.

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