If the bondholder has the right to exchange a bond for shares of common stock, the bond is called a convertible bond.

Convertible Bond

A type of bond that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.

Common Stock

A type of equity security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits.

Bondholder

An individual or entity that owns bonds issued by corporations or governments and is entitled to receive interest payments and the repayment of the principal.