As the name suggests, convertible bonds allow the owner the option to convert the bonds into a fixed number of shares of common stock.

Jorge bought APJ Inc.$$s convertible bond at par $($$$1,000)$ with a yield of $3\mathrm{.}25\%.$ This bond had a conversion ratio of $25$:$1$ at the price of $$40$ per share. If APJ Inc.$$s shares are currently trading at $$48$ per share, should Jorge convert his bond into shares?

Which of the following are most likely to have higher yields?

Nonconvertible bonds

Convertible bonds