The slope of the conversion value line for a convertible bond is equal to the:
A) Conversion ratio.
B) Conversion premium.
C) Straight bond value.
D) Option value.
E) Put value.

Question

Quizplus · Accepted Answer

The slope of the conversion value line for a convertible bond is equal to the conversion ratio. This is because the conversion ratio determines how many shares of the company's stock the bond can be converted into, directly affecting the conversion value as the stock price changes.

The Slope of the Conversion Value Line for a Convertible