ACC 206 Week 6 Issuing Bonds in an organization Discussion

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Business Finance

Acc 206

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Assume you are the chief financial officer of large corporation seeking to raise additional capital to finance a plant expansion. The corporation is weighing the decision to issue convertible bonds or common stock to finance the expansion. What is a convertible bond? Explain the advantages of a convertible bond from the perspective of (a) the bondholders and (b) the issuing corporation. Explain the advantages of issuing common stock from the perspective of (a) the stockholders and (b) the issuing corporation. Make a recommendation to the chief executive officer on the best choice for the corporation based on the advantages provided

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Issuing Bonds in an organization
A convertible bond is a bond which can be converted into a specified amount of shares of
common stock in the company that issues them. The bonds are mostly issued by organizations
which have a low credit rating, and they show a positive growth rate. The following are the
advantages of convertible bonds to the bondholder (Gatev et al.). ...


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