As the price of the stock rises, the probability that a convertible bond will be called increases. Question 16 options: a) True b) False Save

As the price of the stock rises, the probability that a convertible bond will be called increases.

Question 16 options:

	a)	True
	b)	False

Question 17 (2.5 points)

If an investor expected the firm to grow slowly, which of the following strategies would be best?

Question 17 options:

	a)	sell the stock short
	b)	buy a convertible bond and short the stock
	c)	buy the stock
	d)	buy the firm's convertible securities

Question 18 (2.5 points)

Convertible bonds have a call feature to

Question 18 options:

	a)	protect stockholders from early conversions
	b)	protect bondholders from conversions by stockholders
	c)	force stockholders to convert
	d)	force bondholders to convert

Question 19 (2.5 points)

As the price of common stock rises,

Question 19 options:

	a)	the value of convertible bonds and convertible preferred stock declines
	b)	the value of convertible bonds falls but convertible stock rises
	c)	the value of convertible bonds rises but convertible preferred stock falls
	d)	the value of convertible bonds and convertible preferred stock rises

Question 20 (2.5 points)

The interest paid by a convertible bond tends 1. to exceed the firm's common stock dividends 2. to be less than the firm's common stock dividends 3. over time to offset the premium paid for the bond 4. to increase the premium paid for the bond

Question 20 options:

	a)	1 and 3
	b)	1 and 4
	c)	2 and 3
	d)	2 and 4

As the price of the stock rises, the probability that a convertible bond will be called increases. Question 16 options