Convertible Bonds Give the Investor the Option to Buy the Firm's

question 48

True/False

Convertible bonds give the investor the option to buy the firm's stock in exchange for the value of the underlying bond.

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Definitions:

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, usually without voting rights.

Capital Gains Yield

Capital gains yield is the rise in price of an investment or asset, expressed as a percentage of the initial purchase price.

One-year Return

The total percentage return on an investment over a period of one year.

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash or stock.