Which model might an investor use to assess the potential price of a convertible security?

The option/warrant pricing model is particularly suitable for assessing the potential price of a convertible security because convertible securities contain features similar to options. A convertible bond, for example, can be exchanged for a predetermined number of shares of the issuing company's stock. This conversion feature exhibits characteristics akin to an option, where the holder has the right but not the obligation to convert the bond into equity.

By applying the principles of an option/warrant pricing model, one can account for important factors such as the underlying equity's current price, volatility, time to maturity, and the exercise (or conversion) price. These elements are crucial in determining the value of the conversion option embedded in the convertible security, allowing investors to more accurately estimate its price.

While standardized financial models, risk management assessments, and market sentiment analyses may provide some context or complementary insights into an investment’s overall evaluation, they do not specifically focus on the intrinsic option nature of convertible securities like the option/warrant pricing model does. This focused approach to valuing the convertible feature itself is what makes the option/warrant pricing model the most appropriate choice for this assessment.