The Ajax Corporation Issues Bonds That Pay a Minimum of 6

question 56

Multiple Choice

The Ajax Corporation issues bonds that pay a minimum of 6% interest but that can pay more if corporate earnings reach certain specified levels.In lieu of payment under this bond,a holder may exchange it for stock of the corporation.This bond would be a:

• A) callable income bond.
• B) convertible participating bond.
• C) convertible unsecured bond.
• D) convertible secured bond.

---

Definitions:

Price Inelastic

A characteristic of goods or services whose demand does not significantly change with changes in price, indicating that consumers are relatively unresponsive to price adjustments.

Price Elastic

Describes a condition where the demand for a product or service changes significantly in response to a change in its price.

Price Volatile

describes a market condition where prices fluctuate unpredictably and often, which can affect buying and selling decisions.

Premium Products

Goods of higher quality and price than regular items, often offering superior performance or prestige.