When the price of a firm's common stock ________ the conversion price, the market price of the convertible security will ________ to a level close to its conversion value.
A) falls below; rise
B) rises above; fall
C) rises above; rise
D) equals; fall

Question

Quizplus · Accepted Answer

When the price of a firm's common stock rises above the conversion price, the market price of the convertible security will also rise because the value of the option to convert into shares increases, making the convertible security more attractive.

When the Price of a Firm's Common Stock ________ the Conversion