Question
Consider the following 2 bonds. Bond Type A Convertible bond with a conversion ratio of 20 B Identical to A except that it does not
Consider the following 2 bonds.
Bond | Type |
A | Convertible bond with a conversion ratio of 20 |
B | Identical to A except that it does not include a conversion option |
The value of bond A is equal to the value of bond B _______ .
Group of answer choices
plus the value of a put option on the underlying common stock.
minus the value of a call option on the underlying common stock.
plus the value of a call option on the underlying common stock.
minus the value of a put option on the underlying common stock.
With the same information as in the question above, the minimum value of bond A is equal to the ______ . Group of answer choices
the max of the current value of bond B and the value of the call option on the underlying common stock.
the min of the conversion value of bond A and the value of the call option on the underlying common stock.
the max of the conversion value of bond A and the value of the call option on the underlying common stock.
the max of the conversion value of bond A and the current value of bond B.
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