Bonds Valuation: Key Characteristics Select correct one (Convertible, Perpetual, Putable) bonds are exchangeable at the option of the holder for the issuing firm's common stock. Bonds can be issued with warrants giving the holder the option to purchase the firm's stock for a stated price, thereby providing a capital gain if the stock's price rises. Select correct one (Income, Convertible, Putable) bonds contain a provision that allows holders to sell them back to the company prior to maturity at a prearranged price. An Select correct one (income, default, preferred) bonds pay interest only if the firm has earnings, while an indexed (purchasing power) bond bases interest payments on an inflation index to protect the holder from inflation