If the Share Price Rises Substantially Above the Conversion Price,an

question 83

Multiple Choice

If the share price rises substantially above the conversion price,an advantage to the corporation would be:

• A) the premium would decrease.
• B) the floor price would offer the investor downside protection.
• C) the bond would most likely be converted into common shares and the debt would not have to be repaid.
• D) the firm could raise the capital needed by issuing fewer shares than those sold from the conversion of the securities.

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Definitions:

Human Capital

The economic value of an individual's skill set and knowledge, considered an asset in the production process.

Physical Capital

Refers to tangible assets used in the production of goods and services, such as machinery, buildings, and tools.

Productivity

The measure of the efficiency of production, often defined as the ratio of output to inputs in the production process.

Constant Returns To Scale

A situation in production where an increase in the input of resources leads to a proportionate increase in output, resulting in no change in average costs.