This excerpt is taken from an article titled "Caywood Looks for Convertibles," which appeared in the January 13, 1992, issue of BondWeek, p. 7: Caywood Christian Capital Management will invest new money in its $400 million high-yield portfolio in "busted convertibles," double- and triple-B rated convertible bonds of companies...., said James Caywood, ceo. Caywood likes these convertibles as they trade at discounts and are unlikely to be called, he said.

a. What is a busted convertible?

b. What is the premium over straight value at which these bonds would trade?

c. Why does Mr. Caywood seek convertibles with higher investment-grade ratings?

d. Why is Mr. Caywood interested in call protection?

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