When a call is made on a convertible security, the holder of the security will most likely

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When a call is made on a convertible security, the holder has the option to either convert the security into common stock or allow the call to be exercised and accept the call premium. Selling the security in the secondary market is also an option but it is not the most likely choice as the holder may prefer to convert the security to common stock instead, which could potentially generate higher returns. Not taking any action is also possible but it is not the most likely choice as the holder would miss out on the opportunity to either convert the security or accept the call premium. Therefore, the best choice is to convert the security into common stock.

When a Call Is Made on a Convertible Security, the Holder