True or false: (a) The higher the conversion premium, the higher the yield on a convertible bond.

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True or false:

(a) The higher the conversion premium, the higher the yield on a convertible bond.

(b) The higher the volatility of the underlying share, the higher the conversion premium.

(c) A rise in the payout ratio on the underlying share increases the probability of conversion before a convertible bond matures.

(d) A convertible bond does not offer the same percentage of upside participation in the share price as the share itself, but in return it offers downside protection.

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Corporate Finance Theory And Practice

ISBN: 9780470721926

2nd Edition

Authors: Pierre Vernimmen, Pascal Quiry

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Question Posted: May 31, 2024 10:13 AM

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True or false: (a) The higher the conversion premium, the higher the yield on a convertible bond.

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Corporate Finance Theory And Practice

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