Since the conversion feature provides the purchaser of a convertible bond with the possibility of becoming a stockholder, convertible bonds are generally a less expensive form of financing than similar-risk nonconvertible or straight bonds.

Question

Quizplus · Accepted Answer

Since convertible bonds offer the possibility of converting into stock, they are more attractive to investors, making them less expensive for the issuer compared to nonconvertible or straight bonds.

Since the Conversion Feature Provides the Purchaser of a Convertible