When the price of the firm's common stock ________ the conversion price, the market price of the convertible security will normally ________ 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 the firm's common stock rises above the conversion price, the market price of the convertible security will normally rise to a level close to its conversion value because the conversion option becomes more valuable.

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