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Unformatted text preview: more than $2 billion of unsecured bonds outstanding. Convertible and Callable Bonds Bonds that can be converted into common stock at the bondholder's option are convertible bonds . Bonds that the issuing company can retire at a stated dollar amount prior to maturity are callable bonds . Convertible bonds have features that are attractive both to bondholders and to the issuer. The conversion often gives bondholders an opportunity to benefit if the market price of the common stock increases substantially. Furthermore, until conversion, the bondholder receives interest on the bond. For the issuer, the bonds sell at a higher price and pay a lower rate of interest than comparable debt securities that do not have a conversion option. Many corporations, such as USAir, United States Steel Corp., and General Motors Corporation, have convertible bonds outstanding...
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 201 taught by Professor - during the Spring '11 term at Montgomery.
- Spring '11