All of the Following Are Normal Characteristics of a Convertible

question 64

Multiple Choice

All of the following are normal characteristics of a convertible bond,except

• A) Conversion at the option of the issuer.
• B) Conversion into a fixed number of shares of common stock.
• C) A conversion price initially above the market price of the common stock.
• D) An interest rate lower than that on straight debentures.
• E) Subordination.

---

Definitions:

Discount On Notes Receivable

An amount deducted from the face value of a note to reflect the interest revenue over the term of the note.

Notes Receivable

Short-term or long-term financial assets representing amounts owed to the company that are documented through formal agreements or promissory notes.

Interest Revenue

This refers to the income that is earned from investments, loans, or savings accounts, essentially any source that pays interest.

Noninterest-Bearing Note

A promissory note that does not accrue interest over its lifetime, meaning the borrower repays only the principal amount.