Bonds That May Be Exchanged for a Specified Number of Shares

question 115

Multiple Choice

Bonds that may be exchanged for a specified number of shares of capital stock are called:

• A)Junk bonds.
• B)Convertible bonds.
• C)Debenture bonds.
• D)Mortgage bonds.

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Definitions:

Interest

The charge for borrowing money or the amount earned on deposited funds, typically expressed as a percentage of the principal amount.

Compounded Semiannually

Interest calculation method where the interest rate is applied twice a year, resulting in interest on interest being added to the principal.

Monthly Compounded

Monthly Compounded refers to the process of applying interest to an initial sum and its previously accumulated interest at monthly intervals.

GIC

Guaranteed Investment Certificate; a Canadian investment that offers a guaranteed rate of return over a fixed period.