Convertible bonds are often issued with a call feature, allowing the issuing company to repurchase the bonds at a predetermined price before maturity. This feature is beneficial for the issuer, especially if the bonds increase in value due to improvements in the issuer's credit rating or decreases in market interest rates.

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Convertible Bonds

Question 39

Multiple Choice

Convertible bonds:

A) are always issued as mortgage bonds.
B) cannot trade in the marketplace for an amount greater than the straight bond value.
C) are usually short-term bonds.
D) are also usually callable by the issuing company.

Correct Answer: