Explain why in the "real world" a bond will always trade at the higher of its straight value and...
Question:
Explain why in the "real world" a bond will always trade at the higher of its straight value and its conversion value.
Convertible Bond Value:
This question requires a basic understanding of a bond. A bond is a fixed income financial instrument that represents a loan made by an investor (institutional and retail) to a borrower (issuer). The loan is legally enforceable and documented via a bond covenant, which specifies the terms of the loan (maturity date, interest rate, payment frequency, etc.).
Answer and Explanation: 1
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View this answerA convertible bond is one that can be converted into a predetermined number of common stock shares at certain times during the bond's life, usually at...
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Bonds: Types, Characteristics and Issuing Procedures
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Chapter 10 / Lesson 7
10K
Learn about bond relationships. Read a definition of a secured bond. See a comparison between secured vs unsecured bonds, and term bonds vs serial bonds.
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