A ________ permits a firm's capital structure to be changed without increasing the total financing.
A) put option
B) call option
C) conversion feature
D) repurchase agreement

Question

Quizplus · Accepted Answer

A conversion feature allows a firm to convert debt into equity or vice versa without increasing the total financing. This provides flexibility in a firm's capital structure and allows them to adjust to changing market conditions. Put and call options and repurchase agreements do not necessarily involve changes to a firm's capital structure.

A ________ Permits a Firm's Capital Structure to Be Changed