The conversion option of convertible bonds has value because the holder can benefit from some of the later increases in the market value of the firm's _____ after issuance of the bonds.
A)preferred stock
B)paid-in-capital
C)treasury stock
D)common stock
E)debentures

Question

Quizplus · Accepted Answer

The conversion option of convertible bonds allows the bondholder to convert their bonds into a predetermined number of common shares of the issuer. Therefore, the holder can benefit from some of the later increases in the market value of the firm's common stock after issuance of the bonds.

The Conversion Option of Convertible Bonds Has Value Because the Holder