Which of the following statements is NOT true regarding convertible bonds?

A) A convertible bond allows an investor to exchange the bond for a stated number of shares of the firms common stock.

B) The conversion feature offers investors the potential for higher returns if the price of the firms common stock rises above the conversion price.

C) Investors are willing to accept a lower rate of interest on a convertible bond than on a bond of similar maturity issued by the same firm.

D) The interest earned on a convertible bond is tax-exempt for federal tax purposes.

Investors require _____ returns on riskier securities.Consequently, a high-risk security will have a _____ value than a low-risk security even if both securities have the same expected cash flows.

A) lower; lower

B) lower; higher

C) higher; higher

D) higher; lower