- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 42. Fixed-Income Securities: Defining Elements
- Subject 5. Bonds with Contingency Provisions
CFA Practice Question
What is NOT an advantage convertible bonds offer from the issuer's perspective?
A. Reduced interest expense
B. The elimination of debt when market interest rates fall significantly
C. The elimination of debt when the conversion option is exercised
Explanation: Bond issuers cannot call convertible bonds when interest rates fall.
User Contributed Comments 2
| User | Comment |
|---|---|
| nmech1984 | I don;t understand the explanation. Any help? Why bond issuers cannot call convertible bonds when IR fall? |
| nmech1984 | because the bonds are convertible rather than callable? |