Which of the following is an advantage of convertible bonds?

Question

Quizplus · Accepted Answer

The advantage of convertible bonds is that investors have the option to convert the bonds into the company's stock, which allows for the potential for higher returns if the stock price increases. This provides investors with flexibility and a potential for greater returns than just holding the bonds. Choice A is incorrect because convertible bonds do not provide for higher coupon rates upon conversion. Choice C is incorrect because there is generally no penalty for converting convertible bonds into stock. Choice D is incorrect because redeemed investors receive the face value of the bond, not the difference between the face value and market price. Choice E is incorrect because interest payments cease upon conversion of the bond.

Which of the Following Is an Advantage of Convertible Bonds