Which one of the following statements is true?
A)All convertible corporate bonds are quality investments.
B)Convertible bonds often pay 3 to 4 percent more interest than nonconvertible bonds.
C)Because of the conversion feature,investors are attracted to the conservative gain that common stock conversion may provide.
D)There is no guarantee that bondholders will convert to common stock even if the market value of the common stock does increase in value.
E)Even if convertible bondholders convert their investment to common stock,the bondholders still receive interest payments.

Question

Quizplus · Accepted Answer

Convertible bonds offer the option to convert into a specified number of shares of the issuing company's stock, but there's no obligation for bondholders to do so, even if the stock's market value rises. This flexibility is a key feature of convertible bonds, distinguishing them from other fixed-income securities.

Which One of the Following Statements Is True