Generally convertible bonds do not pay interest.

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuing company's shares at certain times during the bond's life, usually at the discretion of the bondholder.

Interest

The cost of borrowing money, represented as a percentage of the principal, paid by the borrower to the lender for the use of the funds.

Recognize and comprehend the features and financial consequences associated with convertible and callable bonds.

Verified Answer

Cande BurzioJun 16, 2024

Final Answer :

False

Explanation :

Convertible bonds do pay interest, usually at a lower rate than traditional bonds, but the real value in these bonds comes from the option to convert them into equity.

Learning Objectives

Recognize and comprehend the features and financial consequences associated with convertible and callable bonds.

Generally convertible bonds do not pay interest.

Definitions

Learning Objectives

Learning Objectives

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