What Is a Convertible Debt Instrument

question 11

Multiple Choice

What is a convertible debt instrument?

• A) A loan to a small business made by a bank that gets converted to a lower interest rate once the startup gets larger.
• B) A mechanism for early-stage investment where the investor is issued a note with an interest rate for the invested amount, convertible to stock at certain price per share upon Series A investment or other events as specified in the note.
• C) A debt instrument that converts to publically traded stock after one year.
• D) None of the above

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