The value of a convertible bond as stock depends in part upon
A) interest rates
B) the maturity date
C) the exercise price
D) the call penalty

Question

The value of a convertible bond as stock depends in part upon
A) ​interest rates
B) ​the maturity date
C) ​the exercise price
D) ​the call penalty

Quizplus · Accepted Answer

The value of a convertible bond as stock primarily depends on the exercise price, which is the price at which the bond can be converted into shares of the company's stock. Lower exercise prices make the conversion option more valuable, as it allows the bondholder to buy shares at a lower price.

The Value of a Convertible Bond as Stock Depends in Part