What allows a corporation to have a debt instrument in its capital structure and are subordinate to other debt issued by the corporation?

Question

Quizplus · Accepted Answer

Convertible investments allow a corporation to have a debt instrument in its capital structure and are subordinate to other debt issued by the corporation. The conversion rights allow a bondholder to convert the bond into shares of common stock, the feature acts as a benefit to induce investors to buy the bonds. This debt instrument feature comes at a cost of lower coupon rate than other available bonds and they are subordinate to other debt issued by the corporation.

What Allows a Corporation to Have a Debt Instrument in Its