A bond is convertible at 40. If the bond is currently selling at 113 and the corporation calls the bond for redemption at 107, what action is a bondholder most likely to take?

A bondholder is most likely to sell the bond when it is currently priced at 113 and the corporation has called the bond for redemption at 107. This situation creates an opportunity for the bondholder to realize a profit by selling it on the market, where it is valued higher than the call price.

Selling the bond at its market price allows the bondholder to capitalize on the higher market value (113), rather than accepting the lower redemption price (107) that the corporation offers upon calling the bond. Even though the bondholder could choose to convert the bond into common stock at a predetermined rate, the bondholder gains a greater financial advantage by selling the bond at market value, given the significant price difference.

This decision aligns with the bondholder's objective of maximizing returns, making selling the bond the most logical course of action in this scenario.