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Recall from class that a convertible bond can be thought of as partially a straight bond and partially equity. With this in mind, which of

Recall from class that a convertible bond can be thought of as partially a straight bond and partially equity. With this in mind, which of the following two securities is likely to provide the higher return:

(a) A straight bond or a convertible bond in the event that interest rates fall

(b) A straight bond or a convertible bond in the event that the idiosyncratic risk of a firms stock increases

(c) A stock or a convertible bond in the event that a firm increases its dividend payments

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