The convertible bonds are considered as hybrid bonds because they have properties of _____________?
Correct answer: C. both debt and equity
- A. debts
- B. common equity
- C. both debt and equity
- D. ordinate and subordinated
Explanation
Convertible bonds begin as debt instruments but give their holders the option to convert them into common shares, giving them an equity feature as well. This combination makes them hybrid securities.
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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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