A step-up in the conversion price refers to
A) the ability of the company to step up the maturity of the bond to an earlier date.
B) the provision that decreases the conversion ratio the longer a convertible bond is held.
C) a refunding of a convertible bond when the conversion value equals the pure bond value.
D) none of these.

Question

Quizplus · Accepted Answer

A step-up in the conversion price refers to a provision that decreases the conversion ratio the longer a convertible bond is held. This means that the holder of the bond will receive fewer shares of the company's stock upon conversion as time passes, which protects the company from dilution of its shares.

A Step-Up in the Conversion Price Refers to