Where does a "convertible bond" get its name?
A) The option of converting into shares of common stock
B) The option of increasing its coupon payments when interest rates increase
C) The option of converting from zero-coupon to coupon-paying bond
D) The option of increasing yield without decreasing price

Question

Quizplus · Accepted Answer

A convertible bond gets its name from its option to be converted into shares of common stock. This feature allows the bondholder to potentially benefit from increases in the issuer's stock price, in addition to receiving interest payments.

Where Does a "Convertible Bond" Get Its Name