The straight bond value is ________.

Question

Quizplus · Accepted Answer

The straight bond value is the present value of the interest and principal payments discounted at a rate the firm would have to pay on a nonconvertible bond, which is option D. Option A is incorrect because it refers to the conversion premium and conversion value, which are not relevant in determining the straight bond value. Option B is incorrect because it refers to the rate that would be paid on a convertible bond, whereas the question is specifically asking about the rate on a nonconvertible bond. Option C is incorrect because it subtracts the conversion value from the market value, which again is not relevant in determining the straight bond value.

The Straight Bond Value Is ________