QUESTION 6 Which one of the following statements about convertible bonds is not correct? O A. Conversion rights can be separated from the bond and sold on in the rights market O B. Conversion ratio is...

Extracted text: QUESTION 6 Which one of the following statements about convertible bonds is not correct? O A. Conversion rights can be separated from the bond and sold on in the rights market O B. Conversion ratio is the number of shares offered per bond O. Conversion value depend in part on the share price growth rate O D. The interest rate on convertible bonds is less that the interest rate on ordinary or straight bonds O E. Convertible bonds increase debt capacity on conversion


Extracted text: QUESTION 5 The 10% convertible debt of Millfield plc is convertible in four years' time at a rate of 20 shares per bond, or redeemable in four years' time at a par value of £100. The current share price of Millfield is £4.00 and this is expected to grow at 8% per year. If Millfield plc has a cost of debt of 12%, what is the current ex interest market value of its convertible debt? (Ignore taxation and work to the nearest 10p). O A. £81.30 O B. £94.00 OC. £99.60 O D.£106.10 O E. £108.80