Which of the following is a type of bond that can be converted into a certain number of shares of the issuer's common stock?

Prepare for the FBLA Securities and Investments Exam with questions, flashcards, and hints to enhance your knowledge and boost your confidence. Excel on your exam!

Convertible bonds are a unique type of fixed-income security that provides holders with the option to convert their bonds into a predetermined number of shares of the issuing company's common stock. This convertibility feature allows investors to potentially benefit from the appreciation of the stock price while still receiving interest payments until they decide to convert.

This option makes convertible bonds particularly attractive for investors who want the stability of bond investments but also want the opportunity for equity-like returns if the company's stock performs well. In the event of a conversion, investors may take advantage of an increase in the value of their shares, allowing for greater potential returns compared to traditional bonds.

Other bond types listed do not offer this conversion feature. T-notes and T-bonds, for example, are U.S. government securities with fixed interest payments and maturity dates, while Series EE bonds are savings bonds issued by the U.S. Treasury intended for savings rather than for direct conversion into stock.

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