Topaz Inc. has issued bonds in $100,000 increments to raise capital for product development efforts. The bonds contain a provision that allows the bondholders to exchange each bond for 25 shares of common stock. Bonds with this type of arrangement are called _____.

Question

Quizplus · Accepted Answer

The described provision in the bonds allows the bondholders to convert their bonds into common stock, making them convertible bonds. Equity bonds are a type of stock, callable bonds can be redeemed by the issuer before maturity, and zero-coupon bonds do not make periodic interest payments.

Topaz Inc Has Issued Bonds in $100,000 Increments to Raise Capital