By buying a ________ bond, investors will have an option to exchange their bond for shares of common stock in the company at a future date.

Question

Quizplus · Accepted Answer

Convertible bonds give investors the option to convert their bonds into common stock in the company at a future date, which provides added flexibility and potential for higher returns. Discount bonds are sold at a discount to their face value, contingent bonds are dependent on a specific event occurring, and preferred bonds pay a fixed dividend but do not have the option to convert into common stock.

By Buying a ________ Bond, Investors Will Have an Option