debt is increased

there is no effect on the firm's capital structure

Question $2(1$ point$)$

The market value of a convertible bond will exceed the conversion value or straight

bond value, whichever is greater, by an amount called the market premium. This

premium exists because

markets are inefficient

buyers and sellers do not usually agree on the conversion value

the straight bond value is close to the conversion value

of the potential for future stock price movements to be positive

Question $3(1$ point$)$

$A(n)$