A bond feature that allows an investor to exchange debt for shares of common stock is called a

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The convertibility feature allows an investor to exchange the bond for a predetermined number of shares of common stock. This feature can provide the investor with the potential for higher returns if the stock price rises, but also introduces additional risk as the stock price could decline, reducing the value of the investment. The other options listed (sinking fund feature, putability feature, callability feature) do not relate to the ability to exchange debt for shares of common stock. The feature being described is the convertibility feature, which allows investors to exchange their bonds for shares of common stock. A sinking fund feature requires the issuer to set aside money to pay off the bond, a putability feature allows the investor to sell the bond back to the issuer, and a callability feature allows the issuer to buy back the bond from the investor.

A Bond Feature That Allows an Investor to Exchange Debt