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Convertible Bonds

Convertible Security

An advantage of a convertible security is that it provides for deferred common stock financing. The purpose of deferring the sale of common stock is to ______ increase the leverage of the firm, dilute the owership interest, minimize dilution in earnings per share, or time the sale of common stock when the price per shar

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Eastern Digital Corp. has a convertible bond outstanding with a coupon rate of 9 percent and a maturity date of 20 years. It is rated Aa, and competitive, non convertible bonds of the same rick class carry a 10 percent return. The conversion ratio is 40. Currently teh common stock is selling for $18.25 per share on the New Y

Conversion of convertible bonds

Successful forced conversion of convertible bonds through a call requires that a. call price exceed par value b. conversion value exceed call price c. bond value exceed conversion value