QUESTION 6Which one of the following statements about convertible bonds is not correct?O A. Conversion rights can be separated from the bond and sold on in the rights marketO B. Conversion ratio is the number of shares offered per bondO. Conversion value depend in part on the share price growth rateO D. The interest rate on convertible bonds is less that the interest rate on ordinary or straight bondsO E. Convertible bonds increase debt capacity on conversion QUESTION 5The 10% convertible debt of Millfield plc is convertible in four years' time at a rate of 20 shares per bond, or redeemable infour years' time at a par value of £100. The current share price of Millfield is £4.00 and this is expected to grow at 8%per year. If Millfield plc has a cost of debt of 12%, what is the current ex interest market value of its convertible debt?(Ignore taxation and work to the nearest 10p).O A. £81.30O B. £94.00OC. £99.60O D.£106.10O E. £108.80

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QUESTION 6 Which one of the following statements about convertible bonds is not correct? O A. Conversion rights can be separated from the bond and sold on in the rights market O B. Conversion ratio is the number of shares offered per bond Oc. Conversion value depend in part on the share price growth rate OD. The interest rate on convertible bonds is less that the interest rate on ordinary or straight bonds O E. Convertible bonds increase debt capacity on conversion

QUESTION 6 Which one of the following statements about convertible bonds is not correct? O A. Conversion rights can be separated from the bond and sold on in the rights market O B. Conversion ratio is the number of shares offered per bond Oc. Conversion value depend in part on the share price growth rate OD. The interest rate on convertible bonds is less that the interest rate on ordinary or straight bonds O E. Convertible bonds increase debt capacity on conversion

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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