Question

By buying a ________ bond, investors will have an option to exchange their bond for shares of common stock in the company at a future date.A. preferredB. convertibleC. contingentD. discount

Answer 1

Answer: convertible bond

   

Explanation: As per the subject matter of business, a convertible bond or convertible debt is a kind of security that can be converted into a stipulated amount of specific stock shares in the issuing corporation or equivalent value money. This is a mixed security including features similar to equity and debt.

Convertible securities are most frequently issued by poor credit ranking businesses with heavy potential for the future. Convertible securities are sometimes considered debentures security, as businesses offer to give predetermined or changing interest rates for shareholder resources as they do in equity bonds.