As interest rates increase, the firm may call its convertible bonds to avoid paying the higher interest rates.

Name: As interest rates increase, the firm may call its convertible bonds to avoid paying the higher interest rates.
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Question

As interest rates increase, the firm may call its convertible bonds to avoid paying the higher interest rates.​

Quizplus · Accepted Answer

Convertible bonds allow the bondholder to convert the bond into a predetermined number of shares of the company, and the decision to call convertible bonds is typically influenced by the company's stock price rather than interest rate changes.

As Interest Rates Increase, the Firm May Call Its Convertible