If bonds can be converted into common stock,

Question

Quizplus · Accepted Answer

Bonds with a conversion feature allow the bondholder to convert their bonds into common stock of the issuing company at a predetermined price and ratio. If the market price of the common stock increases substantially, the bondholder may choose to convert their bonds into stock, which could result in a profit for the bondholder. Therefore, the bondholder may benefit if the market price of the common stock increases substantially.

If Bonds Can Be Converted into Common Stock