PLEASE HELP!! The table shows the balance of an investment account at the beginning of each year the account was held. Assuming no other deposits have been made to the account, which statement describes the accounts growth. The table and answers are attached. I need a short explanation.

1. No. The convertible bonds' lower coupon rate does not suggest that it is less risky than the straight or traditional bonds.  It is even riskier.  Mostly, companies that have reduced financial credit rating issue convertible bonds in the first place.  Secondly, converting into stock suggests that more risks will be tolerated with the hope of increased returns.

2. The cost of capital is lower on the convertibles than on the straight bonds because convertible bondholders will participate in sharing the profits left over by non-convertible bondholders, just like common stockholders when they convert to stock.  This participation in the retained profits is not available for straight bondholders.  This increased participation opportunity requires reduced fixed interest rates or cost of capital.

Explanation:

Convertible bonds are debt instruments that convert into common stock at the time determined by the holder but at the entity's specified price.  Straight (regular or traditional) bonds are not converted into common stock.  They only earn fixed interests from the entity and the return of the face value at maturity.