Copyright

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

Become a Study.com member to unlock this answer!

View this answer

A 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...

See full answer below.


Learn more about this topic:

Loading...
Bonds: Types, Characteristics and Issuing Procedures

from

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.


Related to this Question

Explore our homework questions and answers library