Question

Q 10.29: The current market interest rate for $1,000, 10-year bonds of large corporations in the food industry is 6.3 percent. If a large corporation in the food industry wants to sell $1,000, 10-year bonds with a 4.9% annual interest rate, what type of bond should they consider issuing

Answer 1

Convertible bond

Step-by-step explanation:

Convertible bond refers to the bond in which the investor has an option to convert its bond into another form

By converting the bonds you get the lower interest rate as compared to before.

Therefore as per the given situation, if the one bond contains 6.3% and other contains 4.9% so this represents the convertible bond