A convertible bond issue by a firm can be thought of as:
A) selling straight bonds
B) selling a call options
C) selling the common stock plus a put option
D) selling common stock

Question

Quizplus · Accepted Answer

A convertible bond can be seen as selling common stock plus a put option because it gives the bondholder the right to convert the bond into a predetermined number of shares, similar to a call option on the stock.

A Convertible Bond Issue by a Firm Can Be Thought