What Is a Convertible Bond? $(10$ marks$)$ A convertible bond is a fixed$-$income corporate debt security that yields interest payments, but can be converted into a predetermined number of common stock or equity shares. The conversion from the bond to stock can be done at certain times during the bond's life and is usually at the discretion of the bondholder. As a hybrid security, the price of a convertible bond is especially sensitive to changes in interest rates, the price of the underlying stock, and the issuer's credit rating. Trade Credit Banna $($Pty$)$ Ltd$$s normal credit terms to Noma Stores are $30$ days but is prepared to allow a $3\%$ rebate if Noma Stores pays the account within $10$ days. Required Explain the advantages of using convertible bonds as sources of finance and calculate the cost to Noma Stores of not accepting the discount