Since the purchaser of a convertible security is given an opportunity to become a common stockholder and to share in the firm's future success, convertibles can normally be sold with higher interest rates than nonconvertibles.

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Convertible securities typically offer lower interest rates than nonconvertibles because they provide the added benefit of conversion into common stock, which can be advantageous if the company's stock performs well.

Since the Purchaser of a Convertible Security Is Given an Opportunity