Value of conversion option to bond holder is $550 and rate of return on non-convertible bond is $270 then rate of return on convertible bond is
A. 2.04%
B. $2.04
C. $280
D. $820
Answer: Option C
Solution(By Examveda Team)
Rate of return on convertible bond = Value of conversion option to bond holder - Rate of return on non-convertible bond= $550 - $270 = $280.
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