PREMIUMS ON CONVERTIBLE BONDS: COMMENT.

The article presents commentary about a paper written by Roman L. Weil, Joel E. Segall, and David Green, Jr. (WSG) entitled "Premiums on Convertible Bonds," which was published in the June, 1968 edition of the "Journal of Finance." In that paper WSG observed that the "floor" for convertible bonds contributes little, if anything, to the bond premium. The author of the current paper identifies and explains what he considers to be flaws in their reasoning. In his view it is not clear what contribution the floor makes to a convertible bond premium.