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.
E) All of these are sensible explanations.

Question

Quizplus · Accepted Answer

The Answer of 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.
E) All of these are sensible explanations.

Which of the Following Would Not Be a Sensible Explanation