Which one of the following statements is correct?

Question

Quizplus · Accepted Answer

Option D is correct as the owner of a warrant option benefits if the stock of the firm does well. Option A is incorrect because the bondholder is not forced to convert, but has the option to convert to shares at their discretion. Option B is incorrect because the convertible option on a bond gives the owner the right to convert the bond into shares of common stock, not to buy shares at a cash price. Option C is incorrect because a warrant is a financial instrument that gives the holder the right to buy common shares directly from the issuing company at a predetermined price, but it cannot be converted into convertible bonds.

Which One of the Following Statements Is Correct