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NEW QUESTION: 1
Convertible bonds and bonds issued with warrants differ in that:
A. Convertible bonds have higher coupon rates than straight bonds, while bonds issued with warrants have lower coupon rates than straight bonds.
B. Convertible bonds remain outstanding after the bondholder exercises the right to become an ordinary shareholder, while bonds that are issued with warrants do not.
C. Bonds that are issued with warrants remain outstanding after the bondholder exercises the right to become an ordinary shareholder, while convertible bonds do not.
D. Convertible bonds have lower coupon rates than straight bonds, while bonds issued with warrants have higher coupon rates than straight bonds.
Warrants are usually detachable. They are options to purchase equity securities and should be separately accounted for. A capital gain results if the share price rises above the option price. The bonds remain outstanding if the warrants are exercised. Convertible bonds must be surrendered when the conversion privilege is exercised. Under IFRSs, the equity and debt features of convertible bonds are separately accounted for.
NEW QUESTION: 2
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