Bonds That Permit Bondholders to Convert Them into Common Stock

question 104

True/False

Bonds that permit bondholders to convert them into common stock at their option are known as callable bonds.

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Definitions:

Stockholders' Equity

The residual interest in the assets of a company after deducting liabilities, represented by the shareholders' investment and retained earnings.

Bond Offering

The process of issuing bonds to investors as a way of raising capital, where the issuer owes the holders a debt.

Indenture

A legal document that describes all the details of a debt security to potential buyers.

Covenant

A legal agreement or contract specifying certain conditions or actions that must be met or complied with.