Concerning convertible bonds, which of the following statements is not correct?
A)With regard to security, most convertible bonds are secured by common stock (i.e., they are collateral trust bonds).
B)For most convertible bonds, the issuing firm can, under certain circumstances, effectively force bondholders to convert to common stock.
C)When a convertible bond is called, the owner has the option of receiving cash or stock for the bond.
D)All of the above are incorrect.
E)All of the above are correct.

Question

Quizplus · Accepted Answer

Most convertible bonds are not secured by common stock; instead, they are unsecured bonds with a conversion feature. Therefore, statement A is incorrect. Statements B and C are both correct, and statement D is not a valid answer as it suggests that all options are incorrect. E is also not the correct answer, as statement A is incorrect.

Concerning Convertible Bonds, Which of the Following Statements Is Not