PREMIUMS ON CONVERTIBLE BONDS: COMMENT.

It is the purpose of this note to suggest that WSG's main finding was based on (1) a questionable method of defining the floor variable and (2) an improperly conceived sampling procedure. In the next section the definition of the floor is considered. Following this the sampling procedure is examined. Finally, some alternative empirical results are presented, the apparent contradiction between WSG's and WQ's is reconciled, and it is concluded that the floor is in fact related to premiums in the manner specified by the received theory. [ABSTRACT FROM AUTHOR]