Debbie purchases a corporate bond from Safeway. She has the option of redeeming her bond for 55 shares of Safeway common stock at any time. This is a ____ bond.
A) callable
B) subordinated
C) debenture
D) mortgage
E) convertible

Question

Quizplus · Accepted Answer

This bond is a convertible bond, as it gives the option to the holder to convert their bond into a predetermined number of shares of the company's common stock. Callable bonds can be redeemed by the issuer, subordinated bonds rank lower in priority for repayment in case of default, debentures are unsecured debt securities, and mortgage bonds are secured by property or assets.

Debbie Purchases a Corporate Bond from Safeway