LMN Corporation is proposing to issue $10MM in 20 year bonds, 6.4%, with a conversion feature. The investment value of the convertible bond as debt takes into account:

I. The conversion value of the bond into common stock.

II. The current interest rate that is being paid on comparable, non-convertible, debt.

III. The requirement that principal be retired at maturity.

IV. The annual interest that is being paid by the bond.

I only

I and III

II, III & IV

I, III & IV