Question
Company A and company B issue convertible bonds with identical characteristics except that company A's bond is also callable. Both companies also have identical stock
Company A and company B issue convertible bonds with identical characteristics except that company A's bond is also callable. Both companies also have identical stock characteristics.
a. The coupon on company A's convertible bond will be lower than on company B's bond
b. The coupon on company B's convertible bond will be lower than on company A's bond
c. The coupon on company A's convertible bond will be equal that on company B's bond
d. It is not possible to determine
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
