Callability and convertibility are examples of embedded options in the debt contract.

Name: Callability and convertibility are examples of embedded options in the debt contract.
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Callability allows the issuer to repurchase the bond before maturity, and convertibility allows the bondholder to convert the bond into a predetermined number of shares of the issuer's stock, both of which are options embedded within the bond contract.

Callability and Convertibility Are Examples of Embedded Options in the Debt