Hello,
Here is the background info:
The question and options are:
The current risk-return profile of the Juruá Automotivo bond most closely resembles that of a:
A. hybrid.
B. bond equivalent.
C. stock equivalent.
The answer is C. I guess we are comparing the current conversion price of R$25.00 to the share price of R$30.20.
My question is - what is the threshold that the stock price needs to be above the conversion price, for the convertible bond to behave like a stock?
What if the conversion price is still 25, but the stock price is now 27? Can we still conclude it behaves like a stock?