Accounting Multiple Choice Question – 8 October 2022

Why would convertible loan stock or convertible debenture be issued by a company?

Select ONE answer:

1. to obtain low-cost finance when equity market conditions are unfavourable
2. to increase gearing on conversion
3. to decrease the equity of the company at the issue date
4. to increase the market value of the company’s equity at the issue date

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct
2. Not correct
3. Not correct
4. Not correct

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