A convertible preferred stock is similar to a convertible bond except that:
A)the conversion ratio is fixed.
B)the conversion price is fixed.
C)the time to maturity is infinite.
D)preferred stock converts to common stock while bonds convert to preferred stock.
E)preferred stock converts to bonds while bonds convert to common stock.

Question

Quizplus · Accepted Answer

Convertible preferred stocks, unlike bonds, do not have a maturity date, effectively making their time to maturity infinite. This is a key difference from convertible bonds, which have a fixed maturity date.

A Convertible Preferred Stock Is Similar to a Convertible Bond