Issuing convertible debt may be seen as less attractive / more attractive than redeemable debt by investors?
Question
Issuing convertible debt may be seen as less attractive / more attractive than redeemable debt by investors?
Solution
Issuing convertible debt may be seen as more attractive than redeemable debt by investors.
Convertible debt has the potential to be converted into equity shares of the issuing company at a future date. This gives investors the opportunity to benefit from any increase in the company's share price. In contrast, redeemable debt is a type of debt that can be redeemed by the issuer on specific dates that are before the bond's maturity date, but does not offer the potential upside of conversion to equity. Therefore, from an investor's perspective, convertible debt may be seen as more attractive due to the potential for additional gain.
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