Which of the following situations increase the difficulty of valuing convertible bonds?
A)Dividends
B)Dilution caused by conversion
C)Changing bond price
D)All of the options are correct.

Question

Quizplus · Accepted Answer

All of the given options increase the difficulty of valuing convertible bonds. Dividends received by the bondholder can affect the conversion premium and dilution caused by conversion can affect the stock's market price. Additionally, as the bond price changes, so does its conversion value and its expected returns.

Which of the Following Situations Increase the Difficulty of Valuing