If the holder of a bond can demand that the issuer convert the bond into common stock of a different company at a predetermined price at a set time in the future, the bond has a(n) ______________ option.
A) call
B) put
C) conversion
D) extension
E) exchange

Question

Quizplus · Accepted Answer

This type of bond has an exchange option, which allows the bondholder to exchange the bond for common stock of a different company at a predetermined price at a future date. Unlike a conversion option, which typically involves converting into the issuer's own stock, an exchange option involves stock from a different company.

If the Holder of a Bond Can Demand That the Issuer