Recently,you discovered a putable income bond that is convertible.If you purchase this bond,you will have the right to do which of the following?
I.force the issuer to repurchase the bond prior to maturity
II.choose when you wish to receive interest payments
III.convert the bond into a TIPS
IV.convert the bond into equity shares

Question

Quizplus · Accepted Answer

According to the given information, the bond is a putable income bond that is convertible. This means that the holder of the bond has the right to sell it back to the issuer before maturity (i.e., putable), and they also have the right to convert it into equity shares (i.e., convertible). Therefore, options I and IV are correct, and the answer is B, which includes both options. Option II is incorrect because the question does not mention any flexibility in interest payments, and option III is incorrect because converting the bond into TIPS (Treasury Inflation-Protected Securities) is not mentioned as an option.

Recently,you Discovered a Putable Income Bond That Is Convertible