Question: 1. Case Study: Reverse-Convertibles and Volatility Trading This case study shows another example of volatility trading and reverse convertibles. Read the case study below and

1. Case Study: Reverse-Convertibles and Volatility Trading This case study shows another example of volatility trading and reverse convertibles.

Read the case study below and answer the following questions.

a. What is a reverse-convertible bond? How would you decompose this instrument? How would a corporate treasurer use reverse-convertible bonds?

b. How are the market professionals using reverse-convertibles? Why is there a “flood”?

c. What is a synthetic convertible?

d. What is the other solution mentioned in the text? What are the possible risks behind this solution?

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