Question

Find articles on the Internet and discuss the differences between straight and convertible bonds and the differences between stock options and warrants. How are convertible bonds similar to options? Provide the links for your classmates

Answer 1

STRAIGHT BONDS VS CONVERTIBLE BOND

1. A STRAIGHT BOND IS A BOND THAT PAYS INTEREST AT REGULAR INTERVALS AND AT MATURITY PAYS BACK THE PRINCIPAL THAT WAS ORIGINALLY INVESTED. WHERE AS CONVERTIBLE BONDS ARE THE BONDS THAT ARE ISSUED BY CORPORATIONS AND CAN BE CONVERTED TO SHARES OF THE ISSUING COMPANY'S STOCK AT THE BONDHOLDER'S DISCRETION.
2. CONVERTIBLE BONDS GENERALLY HAVE HIGHER YIELD THAN COMMON STOCK BUT LESS THAN THAT OF STRAIGHT CORPORATE BONDS.
3. THE STRAIGHT BONDS HAVE A FIXED MATURITY PAYMENT BUT THE CONVERTIBLE BONDS MATURITY VALE INCREASES WITH AN INCREASE IN THE PRICE OF THE STOCK OF THE COMPANY.
4. ON WINDING UP THE STRAIGHT BOND HAVE PRIORITY OVER THE CONVERTIBLE BONDS

STOCK OPTIONS AND WARRANTS

1. THE DIFFERENCE OF ORIGINATION, STOCK OPTIONS ARE LISTED WHEREAS WARRANTS ARE ISSUED BY THE COMPANY ITSELF.
2. WHEN STOCK OPTION IS EXERCISED THE SHARE FLOW FROM ONE INVESTOR TO ANOTHER BUT WHEN STOCK WARRANTS ARE EXERCISED THE SHARE FLOW FROM COMPANY TO INVESTOR
3. STOCK WARRANTS EXIST FOR LONG TERM AND STOCK OPTIONS ARE SHORT TERM INVESTMENT
4. COMPANY RAISE CAPITAL FROM WARRANTS AND IN CASE OF OPTION COMPANY DOESN'T GET ANYTHING.

SIMILARITY BETWEEN CONVERTIBLE BOND AND OPTIONS

1. THE OPTIONS AND CONVERTIBLE BONDS GIVES THE INVESTOR THE RIGHT BUT NOT OBLIGATION TO CONVERT OR BUY OR SELL THE SECURITY AT A DETERMINED RATE AND AT DETERMINED TIME.
2. IF THE ANY OF THE ABOVE IS EXERCISED THE OWNER BECOME THE OWNER OF THE COMPANY AS A SHAREHOLDER.