Convertible bonds may dilute current stockholders'
Equity because

Question

Quizplus · Accepted Answer

Convertible bonds can be converted into equity shares, which leads to new shares being issued. This increases the number of outstanding shares, therefore diluting the ownership percentage of current stockholders. The other choices (interest payments, callable bonds, and dividends) may affect the value of the convertible bonds, but they do not directly lead to dilution of stockholders' equity.

Convertible Bonds May Dilute Current Stockholders