Why Are Warrants Less Desirable Than Convertible Debentures as Financing

question 36

Multiple Choice

Why are warrants less desirable than convertible debentures as financing devices for the creation of new common stock?

• A)There is no device for forcing investors to exercise warrants
• B)The conversion of convertible securities erases debt on the balance sheet
• C)Warrants increase the equity of a firm when exercised, but there is no change in the debt
• D)All of the above

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Definitions:

Cochlea

A spiral-shaped cavity within the inner ear, functioning in the process of converting sound waves into neural signals.

Basilar Membrane

A key structure in the cochlea of the inner ear that plays a critical role in sound perception by vibrating in response to sound waves.

Semicircular Canals

Three fluid-filled tubular canals in the inner ear that sense the rotation of the head.

Outer Ear (Pinna)

The external portion of the ear, visible on the side of the head, which captures sound waves and directs them into the auditory canal.