When a Company Has a Convertible Bond in Its Capital

question 75

Multiple Choice

When a company has a convertible bond in its capital structure,

• A) it can reduce its debt-to-equity ratio by calling the bond.
• B) there is no effect on the firm's basic earnings per share.
• C) there is no advantage to the firm in forcing conversion of the bonds.
• D) all of the other answers are correct

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Definitions:

Duty of Obedience

The obligation of board members and officers of an organization to follow the organization’s governing statutes and goals, acting within the scope of their authority.

Officers

Individuals appointed or elected to manage and direct the affairs of an organization, typically within corporations, armed forces, or governmental bodies.

Directors

Individuals elected by shareholders to oversee and guide the management and affairs of a corporation.

Articles of Incorporation

Official legal documents that establish a corporation's existence, outlining its name, purpose, structure, and other essential details.