Coupon rate of convertible bond is_________?
Correct answer: B. Lower
- A. Higher
- B. Lower
- C. Variable
- D. Stable
Explanation
A convertible bond usually offers a lower coupon rate because investors also receive the valuable option to convert it into ordinary shares. That conversion privilege partly compensates for the lower cash interest.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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