Valuation of a Convertible Bond and Comparison of Risk-Return Characteristics

If the market price of Munich Bank Group falls to EUR 15, the factor that is _least likely_ to affect the risk-reward characteristics of Bond D is:

Incorrect. Going forward, this will be one of the primary factors in the market price of the bond.

You got it! When the underlying share price of a stock of a convertible bond is well below the conversion price, the convertible bond exhibits bond risk-reward characteristics.

Incorrect. Actually, this will be one of the primary factors in the market price of the bond going forward.

interest rate movements.

Munich Bank Group’s common stock movements.

a three-notch change in Munich Bank Group’s credit rating.