Asked by Jacob Rutgers on Jul 22, 2024
Verified
Which one of the following statements is correct?
A) A convertible bond can be exchanged for shares of stock.
B) The issuer can deduct the repayment of the bond principal as a business expense for tax purposes.
C) A zero-coupon bond is sold at a deep premium.
D) A "fallen angel" is a coupon bond that has converted to a zero-coupon bond.
E) Corporate bonds are quoted in 32nds.
Convertible Bond
A type of corporate bond that can be converted into a pre-specified amount of the issuing company's equity at certain times during its life, usually at the discretion of the bondholder.
Bond Principal
The face value of a bond, or the amount of money the issuer promises to repay the bondholder at the time of maturity, not including interest payments.
- Learn about special types of bonds (callable, convertible, zero-coupon) and their features.
Verified Answer
CQ
Camila QuirogaJul 23, 2024
Final Answer :
A
Explanation :
Convertible bonds can be exchanged for a predetermined number of shares of the issuing company's stock, making them a flexible investment option for both the issuer and the investor.
Learning Objectives
- Learn about special types of bonds (callable, convertible, zero-coupon) and their features.