Why are convertible bonds attractive to bondholders?

Question

Quizplus · Accepted Answer

Convertible bonds are attractive to bondholders because they can be converted into shares at the bondholder's option, which provides an opportunity for capital appreciation if the share price increases. Additionally, they typically still offer the benefits of traditional bonds, such as a fixed income stream and potential for capital preservation. Convertible bonds do not necessarily carry a higher rate of interest than non-convertible bonds, and the interest rate is generally fixed rather than variable. The issuing company may still have the ability to retire convertible bonds before maturity if they choose to do so.

Why Are Convertible Bonds Attractive to Bondholders