A Bond That Can Be Exchanged, at the Owner's Option

question 17

Multiple Choice

A bond that can be exchanged, at the owner's option, for a specified number of shares of the corporation's stock is called a(n) ____________ bond.

• A) debenture
• B) mortgage
• C) indenture
• D) convertible
• E) subordinated

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Definitions:

Presentment Warranties

Guarantees made when presenting negotiable instruments, like checks, assuring the legitimacy and certain qualities of the instrument.

Instrument

A written legal document that officially records a legally enforceable act, process, or contractual obligation, arrangement, or right.

Promissory Note

A legal instrument in which one party promises in writing to pay a determinate sum of money to the other, either at a fixed or determinable future time or on demand of the payee, under specific terms.

Primary Liability

Primary liability pertains to the direct and immediate obligation to fulfil a financial commitment or compensate for a loss.