From the firm's point-of-view, the issuance of convertible bonds has all of the following advantages EXCEPT

Question

Quizplus · Accepted Answer

The issuance of convertible bonds does not result in an increase in financial leverage upon conversion because the bonds are already included in the company's debt-to-equity ratio. In fact, the conversion of the bonds into equity can reduce the company's financial leverage. Therefore, option D is the correct answer as it mentions an advantage that does not apply to convertible bonds.

From the Firm's Point-Of-View, the Issuance of Convertible Bonds Has