Debentures that the holder (lender) can exchange, possible after some specific period of time has elapsed, for a specific number of shares of common stock or, perhaps, preferred stock of the borrower are called _____ bonds.
A)sinking fund
B)zero coupon
C)serial
D)convertible
E)callable

Question

Quizplus · Accepted Answer

The debentures described are convertible bonds, as they can be exchanged for common or preferred stock. Sinking fund bonds require the issuer to set aside funds to retire the bonds at maturity, zero coupon bonds are sold at a discount and do not pay interest until maturity, serial bonds mature in installments over time, and callable bonds allow the issuer to redeem the bonds before maturity.

Debentures That the Holder (Lender) Can Exchange, Possible After Some