Bonds that may be exchanged for common stock at the option of the bondholders are called
A) options.
B) stock bonds.
C) convertible bonds.
D) callable bonds.

Question

Quizplus · Accepted Answer

Convertible bonds are bonds that give bondholders the option to exchange them for a specified number of shares of common stock in the issuing company. This provides potential upside for bondholders if the company's stock price increases, while also providing the company with a lower interest rate on the bonds since they are potentially more valuable to investors.

Bonds That May Be Exchanged for Common Stock at the Option