Assume That for the Next Two Weeks,the Bondholders of Western

Multiple Choice

Assume that for the next two weeks,the bondholders of Western Markets have the option of exchanging their bonds for common shares of the firm's stock.As a result of these exchanges,you should expect the firm's debt-equity ratio to:

A) decline and the stock's price to also decline.
B) decline and the stock's price to remain constant.
C) decline and the stock's price to increase.
D) increase and the stock's price to increase.
E) increase and the stock's price to remain constant.