If a company's stock price is expected to increase substantially over the next few years,which of the following may entice potential bondholders to accept a lower coupon rate?

Question

Quizplus · Accepted Answer

Convertibility may entice potential bondholders to accept a lower coupon rate because it provides an option to convert the bond into stock at a later date, allowing the bondholders to potentially benefit from the expected increase in stock price. The other options (extendibility, call feature, and put feature) do not directly relate to the expected increase in stock price and therefore may not be as attractive to potential bondholders in this scenario.

If a Company's Stock Price Is Expected to Increase Substantially