Which of the following statements is true?
A) To secure the conversion option on a bond, bondholders would be willing to pay a premium.
B) Typically, the conversion ratio is set so that the firm's stock price must appreciate at least 15 to 20 percent before it is profitable to convert bonds into stock.
C) Convertible bonds can be converted into shares of common stock at some predetermined ratio at the discretion of the bondholder.
D) All of the above are true.

Question

Quizplus · Accepted Answer

All the statements provided are true regarding convertible bonds. Convertible bonds offer the option to convert into a predetermined number of shares, often at a premium, and typically require the stock to appreciate significantly before conversion is beneficial for the bondholder.

Which of the Following Statements Is True