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Question
Which one of the following statements related to convertible bonds is correct?A. Bondholders forego higher coupon rates in exchange for the conversion option.
B. Convertible bonds are generally issued such that the conversion value is equal to the par value.
C. The conversion price is equal to the bond's market value divided by the conversion ratio.
D. The conversion value is equal to the bond's market price multiplied by the conversion ratio.
E. Bonds should be converted as soon as the conversion value exceeds the face value.
Answer
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