Which of the following is not a method by which management is able to manipulate bond covenants to the detriment of the bondholders?

Question

Quizplus · Accepted Answer

The issuance of convertible bonds does not typically involve manipulating bond covenants as it is a separate financing tool. The other options, divisional splits, bankruptcy, and forced exchange offers, can all be used to manipulate bond covenants in ways that are detrimental to bondholders. Issuance of convertible bonds does not necessarily lead to manipulation of bond covenants to the detriment of bondholders. In fact, convertible bonds are a common financing method that allows companies to lower their borrowing costs while giving investors the option to convert their bonds into equity in the future. The other options - divisional splits, bankruptcy, and forced exchange offer - can all be used by management to manipulate bond covenants in their favor, potentially harming bondholders.

Which of the Following Is Not a Method by Which