A. A convertible bond is one that

		is backed by some form of collateral (security)
		may be exchanged for a specified number of shares of the firms common stock
		changes to a variable rate bond when inflation increases above a strike point
		pays no coupon interest and does not mature

B. Which of these statements is true about a conversion feature?

		a bond with a conversion feature means that it has warrants
		the bond indenture allows the investor, at their option, to cash in the bond before maturity
		it allows for exchanging the bond for shares of the firms stock at a fixed price
		the fixed coupon can become variable upon the exercising of the conversion feature