Latetia owns a convertible bond. Which one of the following terms would describe the value of this bond if it were not convertible?

Question

Quizplus · Accepted Answer

The term "straight bond value" refers to the value of a bond if it were not convertible. This is the value Latetia would receive if she chose not to convert her bond into stock. The conversion premium (A) refers to the amount by which the convertible bond's price exceeds the straight bond value. The conversion value (C) is the value that the bond would have if it were converted. Inverted value (D) and market value (E) do not apply to convertible bonds.

Latetia Owns a Convertible Bond