Sample Term Paper

To raise capital, companies can turn to convertible bonds which are based on the conversion price above the common stock market prices. Common stock prices can increase if the investing company can make use of convertible bonds that have warrants.

Warrants entail the opportunity for investors to buy a given number of shares at a set price over a specific period[1]. These bonds offer no dividends, no power and are worthless upon the expiry of the agreed upon date. However, when these bonds are converted back they increase the share prices and return converted securities to the company. The main advantage of this type of bond to a company investing in the capital markets is its ability to increase cash and stock prices simultaneously[2].

[1] Ibid, 48.

[2] Kim, K., Global Corporate, 49.

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