All of the following statements about convertible bonds are FALSE EXCEPT:

By Peter Cherewyk AAA
A:

A. If all of the bonds are converted, the stockholders will benefit.

B. They depreciate when the stock rises in value.

C. They typically carry lower interest rates than non-convertible bonds.

D. They receive interest payments after convertible preferred stock in case of default.






Correct answer: C

Convertible bonds generally offer a lower yield compared to normal bonds that do not have the convertible option.



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