Question

With __________ all of the debt is transformed into ________, whereas debt remains outstanding when ___________ are __________. *

A- Warrants, preferred stocks, convertibles, converted.

B- Convertibles, common stocks, warrants, exercised.

C- Convertibles, preferred stocks, warrants, exercised.

D- Preferred stocks, convertibles, warrants, exercised.

E- Warrants, common stocks, convertibles, converted.

Answer 1

With Convertibles all of the debt is transformed into common stock, whereas debt remians outstanding when warrants are exercised.

Answer - B

In convertibles, the debt can be converted i to common stock and hence no debt is left outatanding after conversion. Warrants give an option to buy stocks at a specific rate, usually at a discount to the market price. Exercising the warrant does not reduce the debt outstanding.

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