If the bondholder has the right to exchange a bond for shares of common stock, the bond is called a convertible bond.

Name: If the bondholder has the right to exchange a bond for shares of common stock, the bond is called a convertible bond.
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Question

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The statement is correct. A convertible bond gives the bondholder the option to convert the bond into a pre-determined number of shares of common stock at a certain price within a specified time period.

If the Bondholder Has the Right to Exchange a Bond