Hi, I’m reading KaplanSchweser notes for Fixed Income for reading 34. I have a question regarding convertible bonds. It says that: “If the stock’s price remains stable, the return on a convertible bond may exceed the stock return due to the coupon payments received from the bond, assuming no change in interest rates or credit risk of the issuer.”
If the stock price doesn’t change the stock return would be 0%, but the return on convertible bonds would always be negative since the straight value will always be less than the market value, is that correct?