When a convertible bond is called, 1. interest ceases to accrue 2. the bondholde

Question

When a convertible bond is called,
1. interest ceases to accrue
2. the bondholder receives the principal
3. the bondholder generally converts the bond
4. dividends are paid to the bondholder

Question 11 options:

1 and 3

1 and 4

2 and 3

2 and 4

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Question 12 (2.5 points)

The value of a convertible bond as debt does not depend on

Question 12 options:

the bond's coupon

the conversion price of the bond

current interest rates

the term of the bond

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Question 13 (2.5 points)

If the value of the stock rises, the value of a convertible bond falls.

Question 13 options:

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Question 14 (2.5 points)

Convertible preferred stock is usually less risky to investors than the firm's convertible bonds.

Question 14 options:

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Question 15 (2.5 points)

Convertible bonds sell for a premium over their
1. market price
2. value as stock
3. value as debt

Question 15 options:

1 and 2

1 and 3

2 and 3

1, 2, and 3

1 and 3

1 and 4

2 and 3

2 and 4

Explanation / Answer

1) b)  
1 and 4

2) d)  
the term of the bond

3) a)   True

4) b)   False

5) d)  
1, 2, and 3

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