A ________ allows the firm to force conversion.
A) warrant
B) option
C) call feature
D) striking price

Question

Quizplus · Accepted Answer

A call feature allows the firm to force conversion, meaning they have the right to call back or redeem a security before its maturity date. This gives the issuer more flexibility and control over their financing options. Warrants and options are both types of securities that provide the holder with the right (but not necessarily the obligation) to buy or sell an underlying asset at a predetermined price, while the striking price refers to the price at which the underlying asset can be bought or sold. While these terms are related to the idea of conversion, neither of them allows the firm to force conversion.

A ________ Allows the Firm to Force Conversion