Which one of the following is a true statement regarding corporate bonds? A corporate convertible bond gives its holder the right to exchange it for a specified number of the company's common shares. A corporate debenture is a secured bond. A corporate callable bond gives its holder the right to exchange it for a specified number of the company's common shares. Holders of corporate bonds have voting rights in the company.

Question

Ibrahim Page

Business

18 July, 21:49

Which one of the following is a true statement regarding corporate bonds? A corporate convertible bond gives its holder the right to exchange it for a specified number of the company's common shares. A corporate debenture is a secured bond. A corporate callable bond gives its holder the right to exchange it for a specified number of the company's common shares. Holders of corporate bonds have voting rights in the company.

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Uriel Randolph · Answer 1

The following statement is true: A corporate convertible bond gives its holder the right to exchange it for a specified number of the company's common shares.

Explanation:

. A corporate debenture is not a secured debt as it is not backed by anything other than the issuer's promise to pay the interest and loan principal. With secured bonds, the issuer will have pledged a secured asset whose title will pass on to the bondholders in the event of default.

. A callable bond is a bond which may be redeemed by the issuer before it reaches the stated maturity date. It does not give its holder the right to exchange it for a specified number of the company's common shares.

. Holders of corporate bonds are not owners of the company but are just debt holders, and therefore have no voting rights in the company. Even though they have no voting rights, being a debt holder however creates a superior claim to a company's assets in the case of liquidation.