Convertible bonds are
I. options attached to bonds that give the bondholder the right to purchase stock at a preset price without giving up the bond.
II. bonds in which the issue matures (converts)a little each year.
III. bonds collateralized with certain types of automobiles.
IV. bonds that may be converted to a certain number of shares of stock determined by the conversion ratio.

Question

Quizplus · Accepted Answer

Convertible bonds are bonds that can be converted into a predetermined number of shares of the issuing company's stock, according to the conversion ratio set at the time of issue. This gives the bondholder the option to convert the bond into stock under certain conditions, typically at the discretion of the bondholder. Options I, II, and III do not accurately describe convertible bonds.

Convertible Bonds Are I. Options Attached to Bonds That Give the Bondholder the the Bondholder