Ask Question
BusinessBusiness
6 April, 09:58

Which of the following is NOT considered a convertible instrument and is indicative of a complex capital structure? a. convertible bonds b. stock options c. warrants d. stock dividend e. None of the answer choices are correct.

+3
Answers (1)
  1. 6 April, 10:28
    0
    e. None of the answer choices are correct.

    Explanation:

    A capital structure that comprises of those securities which can dilute it's earnings per share to common stockholders, is termed as complex capital structure.

    Convertible bonds grant the owners, the right to convert their bonds into stocks, which leads to a dilutive effect on earnings per share for common stock holders.

    Similarly, stock options grants a right to employees to purchase company's stock at a rate lower than the market price. This again is dilutive in nature.

    Warrants are just like call options but when those are exercised create a dilution effect on the earnings per share of the company. Here the holder gets an option to buy new shares at an exercise price at a future date.

    Stock dividends refer to paying common stock holders in the form of additional stock issue rather than paying them cash dividend. Those dilute the stock's price.

    Thus, all four lead to a complex capital structure.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Which of the following is NOT considered a convertible instrument and is indicative of a complex capital structure? a. convertible bonds b. ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
The equity that you build by making mortgage payments is
Answers (1)
A bank has three assets. It has $75 million invested in consumer loans with a three-year duration, $39 million invested in T-bonds with a 16-year duration, and $18 million in six-month maturity T-bills.
Answers (1)
Countries engaged in international trade specialize in production based on
Answers (1)
In the government sector, there is a. nothing comparable to profit and loss that will weed out inefficient activities. b. nothing comparable to bankruptcy that will bring inefficient programs to a halt. c.
Answers (1)
Hoffman Corporation issued $80 million of 8%, 20-year bonds at 105. Each of the 80,000 bonds was issued with 10 detachable stock warrants, each of which entitled the bondholder to purchase, for $20, one share of $1 par common stock.
Answers (1)
New Questions in Business
Select the correct answer. Which form of relativism states that people rely on their own standards of right and wrong when making a decision? A. naïve relativism B. role relativism C. social relativism D. cultural relativism E. habitual relativism
Answers (1)
Beamish Inc., which produces a single product, has provided the following data for its most recent month of operations: Number of units produced 3,700 Variable costs per unit: Direct materials $ 132 Direct labor $ 93 Variable manufacturing overhead
Answers (1)
Consolidated financial statements are being prepared for Behemoth Corporation and its two wholly-owned subsidiaries that have intercompany loans of $50,000 and intercompany profits of $100,000.
Answers (1)
The United Auto Workers represents all workers at a large auto parts manufacturing company. Included in the bargaining unit are welders, electricians, factory line workers, and workers who load and unload stock.
Answers (1)
Read the following descriptions of several different environments. Based on the information given, sort each environment into the correct bin for an environment that would experience predominantly mechanical weathering or predominantly chemical
Answers (1)
Home » Business » Which of the following is NOT considered a convertible instrument and is indicative of a complex capital structure? a. convertible bonds b. stock options c. warrants d. stock dividend e. None of the answer choices are correct.
Sign Up Forgot Password?