Question

Should we separate the debt and equity features of con- vertible debt?
Team 2: Against separation: Present arguments against the separation of the debt and equity features of convert- ible debt.
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Answer #1

Separation of debt and equity features of convertible debt would mean that the difference between them is created on the basis of their convertabilty.

Means that they can be converted afterward from debt to equity or equity to debt.

Such a conversation should not be provided.

Argument against separation is the debt and equity features are different and they holds different value. They should not be converted afterwards. This would greatly impact the company's financial statements.
Also investors would not like such a decision of conversion.

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