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:

Cost Method

An accounting approach for investments, where the investment is recorded at its original purchase cost without subsequent change for market value fluctuations.

Treasury Stock Transactions

The buying, selling, or re-issuance of a company's own shares that were previously outstanding but were repurchased.

Additional Paid-in Capital

The amount of capital that is paid by investors above the par value of the stock during equity issuance.

Contributed Capital

The amount of money that shareholders have invested in a company through the purchase of its stock.