Question

Which of the following best describes the difference between a convertible bond and a warrant? Convertible bonds give the investor the option to exchange bonds for shares at a certain price, whereas warrants give the investor the option to buy shares at a certain price. Convertible bonds give the investor the option to buy shares at a certain price, whereas warrants give the investor the option to exchange bonds for shares at a certain price.

Answer 1

Answer: Statement A

Explanation: Convertible bonds is a type of bond security which gives its holder the right to convert each bond to a specified number of shares. These are hybrid securities having features of both equity and debt.

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Warrants are securities that give their holder the right to purchase the common shares of the company at a specified price and before a certain time period.

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Thus, from the above explanation we can conclude that statement A is correct.