Issuing Convertible Bonds or Bonds with Warrants Is Useful for a Company

Multiple Choice

Issuing convertible bonds or bonds with warrants is useful for a company of unknown risk because:

A) the effects of risk are opposite on the two value components and tend to cancel each
Other out.
B) if the firm is high risk, the option premium will be higher while the straight bond value is
fixed.
C) only risky companies issued these instruments.
D) the equity value is dependent on current risks only, not the future risk at conversion.
E) None of the above.