The conversion feature always causes the bond's price to vary with the stock price.

Question

Quizplus · Accepted Answer

The conversion feature allows a bond to be converted into a fixed number of shares of the issuing company's stock, which can influence the bond's price as the stock price changes. However, the bond's price is also affected by other factors such as interest rates, the issuer's creditworthiness, and overall market conditions, so it does not always vary directly with the stock price.

The Conversion Feature Always Causes the Bond's Price to Vary