Which of the Following Is a Characteristic of Convertible Bonds

question 115

Multiple Choice

Which of the following is a characteristic of convertible bonds?

• A) Conversion increases a firm's debt ratio.
• B) It is a more expensive form of financing than straight bonds.
• C) It enhances marketability of a firm's bonds.
• D) It is nothing but a put option.

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Definitions:

Balance Sheet

An accounting report displaying the financial condition of a business, including what it owns, owes, and the equity held by shareholders on a given date.

Leases

A contractual arrangement where a lessee (user) pays the lessor (owner) for the use of an asset for a specified period of time.

FASB

Financial Accounting Standards Board. The body within the accounting profession that sets rules and standards for the form and content of financial statements.

Yields

The earnings generated and realized on an investment over a particular period, expressed as a percentage of the investment's cost.