Convertible bonds are attractive to investors because

Question

Quizplus · Accepted Answer

Convertible bonds can be converted into stock at a future time, which gives investors the potential to benefit from the stock's appreciation while still receiving interest payments on the bond. This feature makes convertible bonds attractive to investors who want the potential for capital appreciation while still wanting to receive the regular income payments provided by a bond. Options A and B are incorrect because convertible bonds may actually have a lower coupon rate compared to non-convertible bonds and their interest rates are not typically tied to the prime rate. Option D is incorrect because some convertible bonds may be callable by the issuing company before maturity.

Convertible Bonds Are Attractive to Investors Because