What allows for the conversion of a bond into common stock?

The feature that allows for the conversion of a bond into common stock is referred to as a convertible bond. Convertible bonds are a hybrid form of financing that combines elements of both debt and equity. They give bondholders the right, but not the obligation, to convert their bonds into a predetermined number of shares of the issuing company's common stock at specified times during their life.

The reason this feature is significant is that it provides investors with the opportunity to benefit from potential increases in the company's stock price while still receiving fixed interest payments from the bond. This makes convertible bonds appealing to investors who want to limit their downside risk while participating in potential upside gains if the stock performs well.

In contrast, callable options pertain to the issuer's right to repurchase the bonds before their maturity at a set price, while put options give bondholders the right to sell the bond back to the issuer at a specific price before maturity. A mortgage bond is secured by a mortgage on the real estate owned by the issuer and does not provide a conversion feature. Thus, the convertible bond is distinctly designed to allow for the conversion into common stock, making it the correct answer.