The Conversion Feature of a Bond Permits

question 128

Multiple Choice

The conversion feature of a bond permits:

• A) the company to convert a high coupon rate bond into a lower rate bond.
• B) the bondholder to exchange the bonds with a company's common stock.
• C) the bondholder to redeem a small percentage of the bond every year.
• D) the company to convert the face value of the bond to the market price of the bond.
• E) the company to trade outstanding bonds with a term deposit in a financial institution.

---

Definitions:

Workers' Compensation

Insurance providing wage replacement and medical benefits to employees injured in the course of employment.

Gross Payroll

Gross payroll represents the total amount of money a business owes to its employees before any deductions, such as taxes and other withholdings, are made.

Injury

Physical harm or damage to a person's body, often resulting from accidents or violence.

FICA-OASDI

The Social Security portion of the Federal Insurance Contributions Act tax, used to fund the Social Security program in the United States.