A bond that may be converted from coupon payment mode into registered form, or from registered form to coupon payment mode. In other words, an interchangeable bond is a coupon bond or registered bond that can be converted either way. Typically, it is easier to convert coupon bonds into registered without loss, than the other way around because coupon bonds are usually in higher demand than registered bonds and sell at better prices.
The ability to convert from either form is known as bond interchangeability.
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