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Which firms are more likely to use convertible debt?

a) Good firms b) Firms with higher bankruptcy costs c) Firms with higher than industry avg. debt ratios expecting good times ahead d) all of the above

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Question ajoutée par Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town
Date de publication: 2014/05/21
SHAIKH MOHAMMED BASHEER AHMED SHAIKH
par SHAIKH MOHAMMED BASHEER AHMED SHAIKH , Account Manager , Tarik Al Zahid Holding Company

Option A. Good firms will use convertibles because the firm’s true value will be made known before the debt is due. Thus by issuing convertibles now, with a call provision, the good firms can issue equity by forcing conversion which will allow the firm to raise more debt if they need it in the future.

Asad zaman
par Asad zaman , Audit/Finance , Rafaqat Baber and co

To me its Option C, because in order to lower its debt to equities ratio.....

 

Divyesh Patel
par Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town

d) all of the above