Which of the following is true regarding convertible securities:
A)a convertible bondholder is forced to convert at a specific time.
B)the convertible option on a bond gives the owner the right to buy shares from a company at a set price.
C)the owner of a warrant option will benefit if the firm's stock does poorly.
D)the owner of a warrant option will benefit if the firm's stock does well.

Question

Quizplus · Accepted Answer

The owner of a warrant option benefits if the firm's stock does well because the warrant gives the holder the right to purchase the company's stock at a specific price. If the stock's market price exceeds this specific price, the warrant holder can buy the stock at the lower price, potentially selling it at the market price for a profit.

Which of the Following Is True Regarding Convertible Securities