Which of the following bonds may be exchanged for another asset at the owner's discretion?
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A. B. C. D.C
The type of bond that may be exchanged for another asset at the owner's discretion is a convertible bond.
Convertible bonds are a type of corporate bond that provides the bondholder with the option to convert the bond into a predetermined number of the company's common shares at a specified conversion price. This feature gives the bondholder the flexibility to exchange the bond for equity shares of the issuing company at their discretion.
The conversion feature of the convertible bond is a significant advantage for investors since they can benefit from the potential increase in the stock price while still receiving interest payments. If the stock price increases beyond the conversion price, the bondholder can convert the bond into equity shares and realize a profit. If the stock price decreases, the bondholder can choose not to convert and continue receiving interest payments until the bond's maturity date.
On the other hand, municipal bonds, callable bonds, and zero coupon bonds do not offer the option to exchange the bond for another asset at the owner's discretion. Municipal bonds are issued by state and local governments, callable bonds give the issuer the option to redeem the bond before its maturity date, and zero coupon bonds do not pay periodic interest but are sold at a deep discount to their face value and redeemable at face value at maturity.
In summary, the bond that may be exchanged for another asset at the owner's discretion is a convertible bond.