Corporations Issue Convertible Debt for Two Main Reasons

question 29

Multiple Choice

Corporations issue convertible debt for two main reasons.One is the desire to raise equity capital that, assuming conversion, will arise when the original debt is converted.The other is

• A)the ease with which convertible debt is sold even if the company has a poor credit rating.
• B)the fact that equity capital has issue costs that convertible debt does not.
• C)that many corporations can obtain financing at lower rates.
• D)that convertible bonds will always sell at a premium.

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