What Is a Bond Called If It Can Be Converted

question 7

Multiple Choice

What is a bond called if it can be converted into shares of stock of a firm other than the bond issuer?

• A) swap bond
• B) alternate bond
• C) exchangeable bond
• D) convertible bond
• E) callable bond

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Definitions:

Deadweight Loss

Deadweight loss occurs when an economy's total welfare is not maximized, resulting from inefficiencies such as taxes or subsidies that distort market equilibrium.

Pure-monopoly Market

A market structure where a single firm has the exclusive control over the supply of a product or service, with no close substitutes available, allowing for price setting.

X-inefficiency

The difference between actual and minimum possible input costs, often occurring due to a lack of competitive pressure and inefficiencies in production.