ABC Corporation has an outstanding 8% convertible bond that is callable at 102. Currently, the bond is trading at 101. The conversion price is $40, and the common stock is currently trading at $39.50. ABC announces a call at 102. To realize the greatest profit, a bondholder should:
A) sell the bonds at the current market price.
B) continue to hold the bonds.
C) convert the bonds into common and sell the converted shares.
D) tender the bonds.
Answer: D) tender the bonds.