Question: Nicholas Industries can issue a regular nonconvertible 2 0 - year bond with a 6 % annual coupon. Alternatively, Nicholas could issue a 2 0

Nicholas Industries can issue a regular nonconvertible 20-year
bond with a 6% annual coupon. Alternatively, Nicholas could
issue a 20-year bond that can be convertible into its common
equity. If both bonds are issued at the same price (say $,1000),
which of the following most accurately describes the coupon
rate that Nicholas would have to pay on the convertible bond?
It could be less than, equal to, or greater than 6%.
Less than 6%
Greater than 6%.
Exactly equal to 6%
Exactly equal to 8%.
Nicholas Industries can issue a regular nonconvertible 20-year bond with a

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