Concerning Convertible Bonds, Which of the Following Statements Is Not

Multiple Choice

Concerning convertible bonds, which of the following statements is not correct?

A) A convertible bond issue would generally have fewer restrictive covenants than an
Otherwise identical nonconvertible bond.
B) Convertible bonds can be issued at a lower coupon compared with otherwise non-
Convertible bonds.
C) If the value of a convertible bond exceeds the maximum of its straight bond value or its
Conversion value, the difference would be referred to as the option value.
D) Since convertible bonds will be exchanged for ordinary equity, convertible bonds are
Generally not callable.
E) None of the above is incorrect.