CFA Practice Question

There are 252 practice questions for this study session.

CFA Practice Question

A callable convertible bond limits exposure to upside price movement if the common stock soars. This is because of:

A. hard put
B. forced conversion
C. lock out period
Correct Answer: B

The sky is not the limit with converts as it is with common stock. While convertible bonds limit risk if the stock price plummets, they also limit exposure to upside price movement if the common stock soars.

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