Other things being equal,investors will value which of the following bonds the highest?

Question

Quizplus · Accepted Answer

Investors prefer convertible bonds as they provide the investor with an option to convert the bonds into a predetermined number of shares of the issuer's common stock, which could potentially result in higher returns. Callable bonds might offer a higher coupon rate, but the issuer has the option to call or redeem the bonds, leading to uncertainty in the investor's returns. Bonds that are both callable and convertible have a similar issue to callable bonds, where the issuer has the option to call or redeem the bonds, leading to uncertainty in the investor's returns, but with the added option of conversion. Unsecured, callable bonds may have a higher coupon rate but carry higher risk as there is no collateral backing the bond.

Other Things Being Equal,investors Will Value Which of the Following