麻烦助教帮忙看下这题

问题如下：

Digistrype Logistics (DILO) is a Canadian firm that generates a large portion of revenue in Europe. To finance its planned expansion into digital logistics, DILO is seeking to issue euro-denominated bonds to institutional investors in Germany. A term sheet for the proposed bond issue is presented below.

Institutional investors have expressed concern about increased credit risk due to Digistrype’s planned expansion outside of its core business. Digistrype’s CFO would prefer to fund the expansion using debt, despite an expectation of lower market interest rates in the next few years. The CFO is also considering removing the conversion feature because of a concern about the possible share dilution if the bonds are converted to equity and a belief that DILO shares are significantly undervalued.

Which of the following statements best describes the implications of removing the conversion feature from the bond?

选项：

A.

Removal of the conversion feature would likely result in a higher coupon.

B.

Removal of the conversion feature would likely increase the bond price.

C.

Removal of the conversion feature would likely reduce credit risk.

解释：

A is correct. Because the conversion provision is valuable to bondholders, the convertible bond price is higher than the price of an otherwise similar bond without the conversion provision. Similarly, the yield on a convertible bond is lower than the yield on an otherwise similar non-convertible bond. Thus, should the Digistrype team elect to remove the conversion feature, it would likely have to increase the bond’s coupon rate in order to attract investors.

B is incorrect because removal of the conversion feature would decrease, not increase, the bond price.

C is incorrect because removal of the conversion feature would not change the credit risk.