Which of the following support the rationale for issuing convertible bonds?
A) To reduce underwriting costs
B) To permit cheaper initial financing
C) To minimize dilution
D) All of the above are good reasons for issuing convertible bonds.

Question

Quizplus · Accepted Answer

All of the listed options support the rationale for issuing convertible bonds. Convertible bonds reduce underwriting costs as they typically have lower interest rates and shorter maturities than traditional bonds, making them less expensive for companies to sell. By allowing bondholders to convert their bonds into stock, companies can attract investors who might not otherwise invest in their debt securities, which can help to lower initial financing costs. Additionally, convertible bonds can help to minimize dilution that might occur if the company were to issue new equity shares directly.

Which of the Following Support the Rationale for Issuing Convertible