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Basic Question 3 of 10
The minimum value of a convertible bond is the:
B. the bond value + market conversion premium.
C. the maximum value of the conversion value and straight value of the bond.
A. the minimum value of the conversion value and straight value of the bond.
B. the bond value + market conversion premium.
C. the maximum value of the conversion value and straight value of the bond.
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
describe defining features of a convertible bond;
calculate and interpret the components of a convertible bond's value;
describe how a convertible bond is valued in an arbitrage-free framework;
compare the risk-return characteristics of a convertible bond with the risk-return characteristics of a straight bond and of the underlying common stock.
CFA® 2025 Level II Curriculum, Volume 4, Module 28.