If a corporate security can be exchanged for a fixed number of shares of stock,the security is said to be:
A) callable.
B) convertible.
C) protected.
D) putable.
E) None of these.

Question

Quizplus · Accepted Answer

A convertible security is one that can be exchanged for a fixed number of shares of stock at the option of the holder. This means that the holder of the security has the right to convert it into shares of stock at a predetermined ratio. This is a common feature of many types of corporate securities, including bonds and preferred stock. Callable securities can be redeemed by the issuer at a predetermined price, putable securities can be sold back to the issuer at a predetermined price, and protected securities refer to securities that have certain protections built into them (such as downside protection).

If a Corporate Security Can Be Exchanged for a Fixed