A Firm May Prefer to Issue a Convertible Bond, as Opposed

Multiple Choice

A firm may prefer to issue a convertible bond, as opposed to issuing equity, because

A) a convertible issue sends a better signal to investors than an issue of common stock.
B) a convertible issue shows the management's willingness to take a chance that the stock price will rise enough to lead to conversion and also signals management's confidence in the future.
C) a convertible issue sends a better signal to investors than an issue of common stock, and an announcement of a stock issue generates worries of overvaluation and usually depresses the stock price.
D) a convertible issue sends a better signal to investors than an issue of common stock, an announcement of a stock issue generates worries of overvaluation and usually depresses the stock price, and a convertible issue shows the management's willingness to take a chance that the stock price will rise enough to lead to conversion and also signals management's confidence in the future.