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Carrot and stick bond

This query is : Resolved 

15 May 2014 what is carrot and stick bond

15 May 2014 it means something is shown to you very sweet on face and actually it is the reverse,,,,,,,,,,,,,,

15 May 2014 a stick and carrot bond has provisions which sweeten the deal and provisions that penalize too.

its carrot provision provides for a low conversion premium to allure holders to exercise conversion earlier than usual (the carrot). The stick provision allows the issuer to call the bond at a specified premium if the common stock of the issuer is trading at a certain percentage above the conversion price (the stick). This structure combines both rewards and punishments and it is up to the holder to go either course as its investment policy dictates.


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