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Management · Q327

International Finance and Treasury

Graduate and Post Graduate · Management · question 327

Q327

Value of conversion option to bond holder is 740 and rate of return on non-convertible bond is 540 then rate of return on convertible bond is

A.
1.37%
B.
$1,280
C.
$1.37
D.
$200
Answer

Answer: Option D

Solution

Answer: Option D
Solution:
Rate of return on convertible bond = Value of conversion option to bond holder - Rate of return on non-convertible bond
= 540 = $200.
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