[According to the PRMIA study guide for Exam 1, Simple Exotics and Convertible Bonds have been excluded from the syllabus. You may choose to ignore this question. It appears here solely because the Handbook continues to have these chapters.]

The price of an 'out-of-the-money' convertible security is affected by:

I. Changes in interest rates

II. Changes in the issuer's credit risk

III. Changes in the issuer's share price

IV. Changes in the implied volatility of the issuer's share price