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

Question

Quizplus · Accepted Answer

All of the given options increase the difficulty of valuing convertible bonds.

Dividends can potentially affect the conversion value and the overall value of the bond, as they affect the underlying stock price.

Dilution caused by conversion can also affect the conversion value and overall value of the bond.

Changing bond price can impact the value of the bond and make it harder to accurately evaluate its worth. Therefore, all options increase the complexity of valuing convertible bonds.

Which of the Following Situations Increase the Difficulty of Valuing