Which of the following is a motive for using convertible securities in a firm's financing mix?
A) a form of long-term financing
B) opportunity bondholders to share in the firm's future success
C) a method of raising permanent cheap funds for long time
D) an eventual shift in the capital structure to a more levered position

Question

Quizplus · Accepted Answer

Convertible securities allow bondholders to convert their debt into equity in the future. This provides an opportunity for bondholders to share in the firm's future success if the stock price increases. This can be a motivation for using convertible securities in a firm's financing mix.

Which of the Following Is a Motive for Using Convertible