pricing of convertible bonds

Discussion in 'P2.T8. Investment Management (15%)' started by shanlane, Apr 26, 2012.

  1. shanlane

    shanlane Active Member

    Hello,

    In the reading it says that the floor price for a convertible bond is always the investment value but that the max depends on whether or not the bond is at maturity. It states that the option price is the max before maturity and the conversion price is the max at maturity. This may be a really dumb question, but is this because the option price always higher than or equal to the conversion price before maturity?

    Thanks!

    Shannon

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