Of the following provisions that might be found in a bond indenture,which would tend to reduce the coupon interest rate on the bond in question?
A) A subordination clause in a debenture.
B) A call provision.
C) A convertible feature.
D) Having relatively few restrictive covenants.
E) All of the above.

Question

Quizplus · Accepted Answer

A convertible feature allows the bondholder to convert the bond into a predetermined number of shares of the issuing company's stock, which can be an attractive option for investors. This added value typically allows the issuer to offer the bond with a lower coupon interest rate, as investors are compensated for the lower interest rate with the potential for converting the bond into potentially more valuable equity.

Of the Following Provisions That Might Be Found in a Bond