What is a unique feature of a convertible bond?

A convertible bond has the unique feature that it can be converted into a predetermined number of common shares of the issuing company. This characteristic allows bondholders to take advantage of potential increases in the company's stock price while still enjoying the regular interest payments associated with being a bondholder. Convertible bonds thus provide a hybrid investment, combining the characteristics of debt and equity. The ability to convert to equity offers an investment opportunity that is attractive to many investors, particularly in a bullish market.

The other options do not accurately capture the nature of convertible bonds. Convertible bonds are not limited to government issuances, they generally do not have tax exemptions unique to them, and they can often be sold back to the issuer under certain conditions, though this is not their defining feature.