A ________ is an option included as part of a bond or preferred stock that permits the holder to convert the security into a specified number of shares of common stock.
A) put option
B) call option
C) conversion feature
D) repurchase agreement

Question

Quizplus · Accepted Answer

A conversion feature is an option included as part of a bond or preferred stock that permits the holder to convert the security into a specified number of shares of common stock. A put option gives the holder the right to sell the security at a specified price, while a call option gives the holder the right to buy the security at a specified price. A repurchase agreement is an agreement in which a seller agrees to buy back a security from a buyer at a later date.

A ________ Is an Option Included as Part of a Bond