A common reason for issuing convertible bonds is
A) to obtain debt financing at cheaper rates.
B) to avoid paying dividends on common shares.
C) to give the purchaser the option of buying preferred shares.
D) to reduce the debt-to-total assets ratio.

Question

Quizplus · Accepted Answer

The common reason for issuing convertible bonds is to obtain debt financing at cheaper rates. Convertible bonds offer lower interest rates compared to traditional bonds because they give bondholders the option to convert them into equity shares. This makes them a popular instrument for companies looking to raise capital without facing high interest expenses.

A Common Reason for Issuing Convertible Bonds Is