Question

g Which of the following is a good reason to invest in convertible​ bonds? A. They often have higher than normal coupon rates. B. They offer protection against rising interest rates. C. They tend to be issued by​ stable, lowminusrisk companies. D. They offer predictable income and a chance to profit from an increase in the stock price.

Answer 1

Answer:

D. They offer predictable income and a chance to profit from an increase in the stock price.

Explanation:

Convertible bonds refers to fixed term debt security that yields interest, but can be converted into equity shares. A bond can be converted into stock and this solely depends on the bondholder.

The advantage of convertible bonds is that bondholders receive fixed interest rates with an option to convert to stock and also benefit from stock price appreciation.