At the time of issuance, the issuer of a convertible security normally establishes a conversion price ___________the current market price of the firm's stock.

Question

Quizplus · Accepted Answer

The conversion price is usually set above the current market price to provide an incentive for investors to purchase the convertible security. This allows investors to participate in potential future stock price appreciation while also offering downside protection through the bond-like features of the security.

At the Time of Issuance, the Issuer of a Convertible