1. To profit from the apparent mispricing, the Arbitrageur may construct a ratio spread, buying the underpriced call and writing the overpriced call in quantities that are proportional to the options' deltas.

2. Given that Arbitrageurs are primary market purchasers and that convertible bonds tend to be underpriced relative to fundamental value at issue (Kang and Lee 1996; Henderson 2006; Chan and Chen 2007), positive shocks to the capital positions of these Arbitrageurs might result in upward bond price pressure, making issuance more attractive to firms.