Question

All of the following are normal characteristics of a convertible bond, except Group of answer choices Conversion at the option of the issuer. Conversion into a fixed number of shares of common stock. A conversion price initially above the market price of the common stock. An interest rate lower than that on straight debentures. Subordination.

Answer 1

Answer:

Conversion at the option of the issuer.

Explanation:

If the issuer determinates the conversion then, it will only do it in favorable scenarios where the conversion cost is lower than paying the bonds thus, by that definition; a bad scenario for the bondholder as they can see the bond converted into a stock that is crashing if it is a issuer will.

Conversion works the other way around is the bondholders whom decides the conversion. In that manner, they will only convert if consider the company share be worth more than the bond