Because convertibility is a desirable feature for investors, convertible bonds tend to offer a higher return than nonconvertible bonds.

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Convertible bonds typically offer lower interest rates than nonconvertible bonds because they give the bondholder the option to convert the bonds into a predetermined number of shares of the issuing company, which can be a valuable option if the company's stock price increases.

Because Convertibility Is a Desirable Feature for Investors, Convertible Bonds