Which of the Following Could Be a Sensible Reason for Issuing

question 48

Multiple Choice

Which of the following could be a sensible reason for issuing convertibles?

• A) Convertibles are convenient and flexible - they're usually unsecured and subordinated, and cash requirements for debt service are relatively low
• B) Interest rates on convertible issues are significantly less than on straight debt
• C) Firms that need equity capital use convertibles as a roundabout way of issuing stock
• D) Firms prefer to issue convertibles when their shares are under-valued