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.

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 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.

Which of the Following Would Not Be a Sensible Explanation