UPSC Prelims 2022 · GS Paper 1 · Q35

Economy

Medium · Characteristics of Convertible Bonds

Consider the following statements regarding convertible bonds:

1. Convertible bonds typically carry a lower coupon (interest) rate than comparable non-convertible bonds, because of their embedded equity-conversion option.

2. Convertible bonds offer investors some measure of protection against rising consumer prices.

Which of the statements given above is/are correct?