A convertible bond carries an element of downside risk if its "floor value" were to exceed the price of the company's stock.

Question

Quizplus · Accepted Answer

If the floor value (the minimum value that the convertible bond will have if it is not converted into stock) exceeds the current price of the company's stock, this would actually provide a level of downside protection for the investor holding the convertible bond.

A Convertible Bond Carries an Element of Downside Risk If