Issuing convertible debt makes sense whenever investors have difficulty estimating the risk of the company's bond.

Question

Quizplus · Accepted Answer

When investors have difficulty estimating the risk of the company's bond, issuing convertible debt may be a more attractive option because the convertible feature provides them with the potential for greater returns if the company performs well in the future, while also offering some downside protection if the company's financials worsen. This can make it easier for the company to raise funding even if it has a higher risk profile.

Issuing Convertible Debt Makes Sense Whenever Investors Have Difficulty Estimating