Which one of the following statements is correct?
A) A convertible bond will be priced less than a similar callable bond.
B) A convertible bond will be priced more than a similar callable bond.
C) Similar callable and convertible bonds will have the same price.
D)Warrants are always priced more than convertible bonds.

Question

Quizplus · Accepted Answer

Convertible bonds offer the holder the right to convert the bond into a predetermined number of shares of the issuing company, which can add significant value if the company's stock price increases. This feature makes convertible bonds more valuable than similar callable bonds, which only give the issuer the right to repurchase the bond before its maturity at a predetermined price, without offering any additional benefit to the bondholder.

Which One of the Following Statements Is Correct