Canadian Securities Course (CSC) Level 1 Test 2025 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 400

What is a forced conversion related to bonds?

A requirement to increase the bond's face value

Conversion to foreign currencies

Conversion into physical assets

Issuer calling the bond for conversion into common stock

A forced conversion refers to a situation where a bond issuer requires bondholders to convert their bonds into a predetermined amount of common stock. This typically occurs when the issuer exercises an option to convert the bonds into shares, which is a provision that might be included in certain convertible bonds. In this scenario, the bondholders do not have the option to refuse the conversion; they must comply with the issuer's action. Such provisions can serve various purposes for issuers, including managing debt levels or transforming debt into equity.

The other options do not accurately reflect the concept of forced conversion in the context of bonds. Increasing a bond's face value pertains to different aspects of bond terms, while conversion to foreign currencies and physical assets involve entirely different financial processes that do not map onto the concept of bonds being converted into equity.

Get further explanation with Examzify DeepDiveBeta
Next Question

Report this question

Download Canadian Securities Course (CSC) Level 1 Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy