Convertible Bond Value An analyst has recently informed you that at the issuance of a company’ s convertible bonds, one of the two following sets of relationships existed:

Scenario A Scenario B Face value of bond $1,000 $1,000 Straight value of convertible bond 900 950 Market value of convertible bond 1,000 900 Assume the bonds are available for immediate conversion. Which of the two scenarios do you believe is more likely? Why?