Convertible bonds with a floating conversion price is treated solely as debt.

Name: Convertible bonds with a floating conversion price is treated solely as debt.
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Question

Quizplus · Accepted Answer

Convertible bonds with a floating conversion price have both debt and equity components because the conversion feature is considered an embedded derivative that needs to be separated from the debt component and accounted for as equity or as a derivative liability, depending on the specific terms of the bond.

Convertible Bonds with a Floating Conversion Price Is Treated Solely