Question

Which of the following are advantages of convertible debt to issuing companies?

	a.	Convertible bonds usually have an above average number of restrictive clauses.
	b.	Convertible bonds offer owners a chance to limit their risk of stock investment.
	c.	Convertible features can induce lenders to accept lower interest rates.
	d.	Convertible bond owners can participate in stock appreciation.

A growth rate that exceeds the market return is called:

	a.	normal growth.
	b.	limited growth.
	c.	acceptable growth.
	d.	supernormal growth.

The nature of cash flow from common stock ownership comes from:

	a.	sale of the stock.
	b.	dividends.
	c.	both dividends and sale of the stock.
	d.	a guarantee.

Total return for a constant growth stock consists of:

	a.	capital gains yield.
	b.	dividend Yield.
	c.	current Yield.
	d.	Both a & b
	e.	All of the above

Members of the general public who have expressed interest in an IPO during the road show are referred to as:

	a.	off market investors.
	b.	auction public.
	c.	retail investors.
	d.	insiders.

Answer 1

1.Convertible debt a type of debt which provide the option to the holders to convert them into shares.

The benefit of convertible debt to the the company is it generally offer a lower rate of interest so it is a cheap debt with the stock option embedded to it.

Rest of the options are false because convertible bonds do not have much restrictions and bond owners can't participate till the exercise date.

So the correct answer would be option (c)Convertible features can induce lenders to accept lower interest rates.