1/ The conversion ratio is the:

price at which a convertible security is exchanged into common stock.

ratio of conversion value to market value of a convertible security.

number of shares of common stock that the convertible debt may be converted into.

ratio of the conversion premium to market value of a convertible security.

2/ Which of the following is not a characteristic of convertible bond issues?

The average size of the offering is small.

A 15-20% conversion premium at the time of issue is common.

Large companies with billions of dollars in sales and assets are the primary issuers.

Primary issuers tend to have less than AAA bond credit ratings.

3/ Which of the following characteristics are drawbacks of convertible bonds?

Downside protection is ineffectual if the bond is bought at a large premium over floor value.

Interest rates on the debt-instrument part of a convertible bond are frequently below market interest rates.

Conversion may be forced on the bondholder by call provisions on the convertible bond.

All of these options are drawbacks of convertibles.