A conversion feature allows

Question

Quizplus · Accepted Answer

A conversion feature allows the bondholder to convert the bond to common stock. This may be advantageous to the bondholder if the stock price rises significantly, allowing them to benefit from the increase in value. Option A is incorrect because the ability to redeem the bond before its maturity date would be a call feature. Option B is incorrect because the corporation converting the bond to other debt would be a company action, not a bondholder option. Option D is incorrect because increased collateral would be a security provision, not a conversion feature.

A Conversion Feature Allows