All of the following statements regarding bonds with both a convertible and callable feature are correct EXCEPT:
A) the coupon rate on a convertible bond would be less than the rate for comparable nonconvertible debt.
B) if called, the owners have the option of retaining the bonds and will continue to receive interest.
C) after the call redemption date, interest payments will cease.
D) dilution of company stock will occur on conversion of the bonds.
Answer: B) if called, the owners have the option of retaining the bonds and will continue to receive interest.