Series 7 - General Securities Representative Exam

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Your client owns some convertible bonds in ABC Corporation. The common stock is currently trading above parity. What should your client do?

Convert to stock
A
Do not convert to stock
B
Buy preferred stock & keep the convertible bonds
C
Buy warrants and do not convert to stock
D

Explanations

For convertible bonds, converting is always profitable with the stock is trading above parity. There is no data to indicate if he should buy preferred stock or warrants