Frequently Asked Question
All of the following statements about convertible bonds are FALSE EXCEPT:
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.
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.
by
Peter Cherewyk
Peter Cherewyk has worked in the financial field for over 10 years. He completed his Bachelor of Commerce from the University of Alberta, and is currently working towards a Chartered Financial Analyst designation. He enjoys hockey and hiking and the opportunity to teach others.
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