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All of the following are true statements regarding convertible bond issues EXCEPT: A at the time of issuance, the conversion price is set at a premium to the stock's current market price B the yield on convertible issues is higher than the yield for similar non-convertible issues C when the stock price is at a premium to the conversion price, bond price movements are usually caused by those of the stock D when the stock price is at a discount to the conversion price, bond price movements are usually caused by interest rate changes

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maranathaoye

Answer: B is the best answer

Explanation:

When convertible bonds are issued, the conversion price will be at a premium in relation to the current market price which is normal. Therefore the stock price must go up in the market for the conversion to be worthwhile. Convertible bonds can be sold when the yield is low compared with bonds that does not have the conversion feature.

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