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All of the following are advantages to the corporation of issuing convertibles EXCEPT: Multiple Choice Provides...

All of the following are advantages to the corporation of issuing convertibles EXCEPT:

Multiple Choice

  • Provides a low-cost financing alternative for large, high-quality companies.

  • Is used when the corporation believes its stock is undervalued.

  • Generally is lower cost than straight debt.

  • Provides access for small companies to the debt market.

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Answer #1

All of the following are advantages to the corporation of issuing convertibles EXCEPT:

  • Is used when the corporation believes its stock is undervalued.

A corporation repurchases stock when they believe their stock is undervalued and not issue convertible.

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