Compared to normal bondholders, convertible bondholders have a greater interest in seeing the firm's stock price increase.

Question

Quizplus · Accepted Answer

Convertible bondholders have the option to convert their bonds into the company's stock, so they benefit from an increase in the stock price as it makes their bonds more valuable. Normal bondholders do not have this option and are not affected by changes in the stock price.

Compared to Normal Bondholders, Convertible Bondholders Have a Greater Interest