Which of the Following Would Not Be a Sensible Explanation

question 6

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 common stock.
• 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.

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Definitions:

Energy Efficiency

The practice of using less energy to provide the same service or achieving a task, leading to reduced energy consumption and expenses.

Sales Presentation

A formal meeting or pitch where a salesperson showcases a product or service to potential buyers, aiming to secure a sale.

Psychological Factors

Elements of human behavior such as motivation, perception, learning, beliefs, and attitudes that influence consumers' buying decisions.

Buying Decisions

The process by which consumers identify their needs, gather information, evaluate alternatives, and make the purchase decision.