When a bond matures, an investor will convert if the market price of the convertible bond is higher than the conversion price of the bond.

Question

Quizplus · Accepted Answer

When a bond matures, the investor does not convert based on the market price; instead, the issuer typically pays back the principal amount of the bond. Conversion decisions are usually made before maturity, based on whether converting the bond into stock would be more valuable than its redemption value, not on the bond's market price at maturity.

When a Bond Matures, an Investor Will Convert If the Market