Which of the Following Would Not Be a Sensible Explanation

question 29

Multiple Choice

Which of the following would not be a sensible explanation of why convertibles and warrants are issued if markets are efficient?

• A)Cash flow from these securities best match cash flow of the firm.
• B)If the firm does well,convertible bonds will turn out to have been the better alternative versus issuing ordinary equity.
• C)The securities are useful when it is costly to assess the risk of the issuing firm.
• D)The securities may resolve agency problems associated with raising money.
• E)All of the above are sensible explanations.

---

Definitions:

Task Purposes

The objectives or goals that a specific task or activity is intended to achieve.

Bill Gore

The founder of W.L. Gore & Associates, a company known for its innovative corporate culture and the development of Gore-Tex materials.

Empowered Teams

Groups of individuals who are given the autonomy, resources, and skills to make decisions within their areas of responsibility, enhancing their effectiveness and satisfaction.

Extend Fairness

The act of broadening or applying just and equitable treatment in more situations or towards a greater number of people.