When convertible bonds are exchanged for common stock which of the following is not true?

Question

Quizplus · Accepted Answer

All of the statements provided are true regarding the exchange of convertible bonds for common stock. When convertible bonds are exchanged for common stock, the company's debt decreases while its equity increases, leading to a lower debt to equity ratio. This exchange also eliminates the need for future interest payments on the converted bonds, thereby reducing interest expense and increasing the times-interest-earned ratio. Additionally, since the bonds are converted into stock, they do not need to be repaid at maturity.

When Convertible Bonds Are Exchanged for Common Stock Which of the Following