What is a convertible debt instrument?

Question

Quizplus · Accepted Answer

A convertible debt instrument is a type of investment where the investor loans money to a startup in exchange for a note that can be converted to equity or stock at a later date. This is usually done at a discounted or predetermined price per share, and is often used in early-stage investing as a way for investors to get in before a company goes public. Option A is incorrect as there is no provision for conversion to equity. Option C is incorrect, as there is no automatic conversion to publicly traded stock. Option D is also incorrect, as B is the correct answer.

What Is a Convertible Debt Instrument