Answer:
May be exchanged for equity securities.
Step-by-step explanation:
A convertible bond is an example of debt security that provides an investor with a right or an agreement to exchange the bond for a predetermined number of shares in the issuing company at certain times of a bond’s lifetime. It is a hybrid security that contains components of both debt and equity.
A convertible bond is accompanied with a maturity date and pays interest to investors. If an investor decides not to convert their bonds to equity, they wi get the bond’s face value at the maturity. However, if an investor changes the bonds to the company’s shares, the bond will lose all its debt features and then possess only equity component.