Which of the Following Is an Advantage of Convertible Bonds

question 107

Multiple Choice

Which of the following is an advantage of convertible bonds?

• A)Investors can convert the bonds into higher coupon rate bonds.
• B)Investors can choose to hold the company's bonds or convert the bonds into its common stock.
• C)Investors are paid a penalty on the conversion of the bonds.
• D)Investors are redeemed for the difference between the face value and the market price on redemption of the bonds.
• E)Investors can claim interest for the remaining life of the bonds on the bonds' early conversion.

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Definitions:

Conglomerate Acquisition

A type of corporate action in which a company purchases another company that operates in a completely different industry.

Horizontal Acquisition

The purchase of a company operating at the same level of the value chain in similar or different industries to increase market share.

Vertical Acquisition

A corporate strategy where a company acquires another company in the same supply chain.