CFA Practice Question

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CFA Practice Question

Which measure represents the premium investors effectively pay for the underlying shares if they buy the convertible bond and then convert it into shares?

A. market conversion price
B. market conversion premium per share
C. value of convertible bond - value of the straight bond
Correct Answer: B

It allows investors to identify the premium when buying the convertible bond rather than the underlying common stock.

User Contributed Comments 1

User Comment
ALOA123 The Price you are effectively paying is the market conversion price. The price OVER the current share price is the market conversion premium per share.
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