Discussion of An Empirical Study of the Cost of Convertible Securities.

The article presents a commentary on the article "An Empirical Study of the Cost of Convertible Securities," by Peter H. Knutson. The author acknowledges that the market value of convertibles is not determined solely by the nominal rate of return. He notes that the market value of convertibles is influenced by present and expected future earnings in the same way that common stock is influenced. The author agrees with Knutson that earnings per share and cost of convertibles are often misstated. He disagrees with Knutson's real cost theory.