Knowledge Base

What is the typical threshold for the issuer to exercise its early redemption option (soft call)?

>100% of the conversion price

>110% of the conversion price

>125% to 130% of the conversion price

>150% of the conversion price

What is the typical range of the conversion premium for a convertible bond?

10% to 20%

25% to 40%

40% to 60%

60% to 80%

What is the main characteristic that distinguishes a convertible bond (OCA) from a standard bond?

The payment of fixed coupons

The possibility of conversion into shares

The repayment at maturity

The interest rate sensitivity

What effect does the underlying share price have on the valuation of a convertible bond?

The share price has no impact on the valuation

The value always rests on the bond component

The value is primarily based on the bond component if the share price is below the conversion price

The value is always equal to that of the underlying share

The conversion period for an OCEANE is three months.

True

False

Dilution risk affects only investors in convertible bonds.

True

False

Categorize items by dragging them to the appropriate zones

Items to categorize:

Dilution risk

Underlying share risk

Interest rate risk

Credit risk

Liquidity risk

Forced conversion risk

Categories:

Risks affecting the bond component

Risks affecting the equity component

Risks specific to hybrid bonds

Definition of an ORA

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