On average, convertible bonds have call premiums of less than 10% at the time of issue.

Question

Quizplus · Accepted Answer

This statement is true. Convertible bonds typically have call premiums of less than 10% at the time of issue, which means that the bond issuer can buy back the bonds at a relatively low cost if they choose to do so. This is because convertible bonds usually offer a lower coupon rate than non-convertible bonds due to the added feature of the potential conversion to equity.

On Average, Convertible Bonds Have Call Premiums of Less Than