Convertible bonds
A) have priority over all other types of bonds.
B) are usually secured by a first or second mortgage.
C) pay interest only in the event earnings are sufficient to cover the interest.
D) may usually be exchanged for common shares.

Question

Quizplus · Accepted Answer

Convertible bonds are bonds that can be converted into a specified number of shares of common stock at the bondholder's discretion. They typically pay a lower interest rate than other bonds because of the conversion feature. Therefore, choice D is correct that convertible bonds may usually be exchanged for common shares while the other options are incorrect.

Convertible Bonds