You consider two bonds ( A and B ) that are identical (same company, same maturity, same coupon, etc.). The only difference between the two is that Bond A is convertible. We can state that: The required return (yield) on Bond A is superior relative to the expected return on Bond B. The required return (yield) on Bond A is inferior relative to the expected return on Bond B. The required return (yield) on Bond A is equal to the expected return on Bond B. None of the answers is correct