Knowledge Base

← Explain the characteristics and risks of hybrid/composite securities such as convertible bonds
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What effect does the underlying share price have on the valuation of a convertible bond?

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