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:

Standard Rate

A predetermined cost or price used in budgeting and costing exercises, reflecting an expected or agreed level of expenditure or charge.

Variable Factory Overhead Controllable Variance

The difference between the actual and budgeted variable overhead costs that management has the ability to influence or control.

Actual Hours

The real number of hours worked or spent on a particular activity or project, as opposed to planned or estimated hours.

Standard Hours

The preset amount of time expected to complete a task or work process in an efficient manner.