The conversion feature of a bond is a feature that is included in nearly all corporate bond issues that gives the issuer the opportunity to repurchase bonds at a stated price prior to maturity.

Question

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The statement is incorrect. The conversion feature of a bond allows the bondholder the option to convert the bond to a predetermined number of shares of common stock at a set conversion price, typically before maturity. The issuer may include a call feature that allows them to repurchase the bonds, but this is not a part of the conversion feature.

The Conversion Feature of a Bond Is a Feature That