A Company Is Advised to Issue Convertible Notes

question 36

Multiple Choice

A company is advised to issue convertible notes.They are advised of the conditions applicable to the convertible note issue.Which of the following conditions is incorrect?

• A) The holder of the note has the right to convert the note into preference shares.
• B) Notes are generally available on a pro-rata entitlement to shareholders.
• C) Entitlements to convertible notes are generally not renounceable.
• D) Notes are usually issued at a price close to the current share price at the time of issue.

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Definitions:

Government Failures

occur when government action results in outcomes that fail to achieve desired welfare improvements or when the intervention leads to an inefficient allocation of resources.

Economic Efficiency

A situation in which all resources are allocated optimally to serve each individual or entity in the best way while minimizing waste and inefficiency.

Public Sector

Part of the economy composed of both public services and public enterprises, owned and operated by the government.

Voting Irregularities

Occurrences in the electoral process that deviate from legal or ethical standards, including but not limited to fraud, suppression, and miscounting.