Occasionally it is said that issuing convertible bonds is
better than issuing stock when the firms shares are
undervalued. Suppose that the financial manager of Decent
Furniture Company does in fact have inside information
indicating that the decent stock price is too low. Decent
furniture earnings will in fact be higher than investor’s
expectations. Suppose further that the inside information
cannot be released without giving away a valuable
competitive secret. Clearly, selling shares at the present
low price would harm Decent’s existing shareholders. Will
they also lose if convertible bonds are issued? If they do
lose in this case, is the loss more or less than it would
be if common stock is issued?

Now suppose that investors forecast
earnings accurately, but still under value the stock
because they overestimate Decent’s actual business risk.
Does this change your answer to the questions posed in the
preceding paragraph? Explain.


No Answer is Posted For this Question
Be the First to Post Answer

Post New Answer

More CompanyAffairs CS Interview Questions

state your views about liberalisation of banks

1 Answers  


How can i treat the tds in the Books of Deeductee. Example suppose my company recives an amount on Job work charges by giving tds to a deductor company. Then will i creat it under tax and liability ledger or other.

4 Answers   eClerx,


what is the path of insurance calculation?

0 Answers   Capita, IBM,


who are the potential share holders?

1 Answers  


A prouduct passed through three stage of the production and product for each stage become the raw material for the new stage further raw material on also added at each stage . During the march 2000, 1000 unit of finishied prouduction produced with following expenditure. A B C material 10000 8000 4000 labour 8000 12000 6000 on cost 5000 4000 2000 inculuded expenses amount to 5200 and to be allocated on the bassis of labour main raw material issue to stage A was worth rs 6400\- prepare the procesing cost account with unit each stage and total cost finishied product the final stage.

1 Answers  






How does a bank or financial institution calculate COGS? What are the 'direct' costs of a loan or deposit revenue operation?

0 Answers   JP Group,


what need to b a cs is graduation is necessary?

1 Answers  


1) What is the steps of delisting the listed company 2) How to spliting the listed company shares 3) Which way the company should function when it has paidup capital is equal or more than 5,00,00,000/- (I mean which way the company should do it work in the company Act 1956. Is the company have to appoint a CS and and managing director of a any other things which is compulsory for these kind of company which paid up capital is 5,00,000/-

0 Answers  


what is the Journal entry for Salaries outstanding? Giv an example.

27 Answers   ACS, Apple, Cognizant, Genpact, HSBC, Infosys,


What should be the answere when asked "tell me about your self".

4 Answers  


Is labour act applicable for firms?

1 Answers  


How are GDR different from ADR when both are denominated in US dollors??

3 Answers  


Categories