Loan capital which can be converted into equity capital at the option of the holder is known as:

Question

Quizplus · Accepted Answer

Convertible loan stock can be converted into equity capital at the option of the holder, making it a flexible source of capital. Preference shares are shares with preferential rights over ordinary shares, but may not be convertible. Warrants are a type of option which allow the holder to buy shares in the future at a predetermined price, but do not represent actual ownership of shares. Therefore, the best choice is convertible loan stock.

Loan Capital Which Can Be Converted into Equity Capital at the Option