One advantage to the corporation in selling a convertible bond is

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Selling a convertible bond allows the corporation to obtain cheaper financing as the interest rate on a convertible bond is typically lower than on a straight debt issue. This is because investors have the option to convert their bonds into stock, which provides them with additional upside potential. However, this option may not be exercised, so there is a risk of dilution if too many bonds are converted into stock. Additionally, if interest rates fall, the corporation may choose to refund the bond, which can be beneficial for them.

One Advantage to the Corporation in Selling a Convertible Bond