Concerning convertible bonds, which of the following statements is not correct?
A)With regard to security, most convertible bonds are secured by ordinary equity (i.e., they
Are collateral trust bonds).
B)For most convertible bonds, the issuing ﬁrm can, under certain circumstances, effectively
Force bondholders to convert to ordinary equity.
C)When a convertible bond is called, the owner has the option of receiving cash or equity for
The bond.
D)The bond ratings of ﬁrms using convertibles are lower than those of other ﬁrms.
E)All of the above are incorrect.

Question

Quizplus · Accepted Answer

Most convertible bonds are not secured by ordinary equity (i.e., they are not collateral trust bonds). Instead, they are typically unsecured debt.

Concerning Convertible Bonds, Which of the Following Statements Is Not