Which of the following increase(s) the difficulty of valuing convertible bonds?
A)Dividends
B)Dilution caused by conversion
C)Changing bond price
D)All of the options are correct.

Question

Quizplus · Accepted Answer

All of the options listed increase the difficulty of valuing convertible bonds.

Dividends can affect the conversion value of the bond, which impacts its overall value. Dilution caused by conversion can also be a factor as it affects the number of shares outstanding and their respective values. Changes in the bond price can also impact the conversion threshold and overall value of the bond. Therefore, considering all of these factors together can make valuing convertible bonds more complex.

Which of the Following Increase(s) the Difficulty of Valuing Convertible