Because the conversion feature in a convertible bond is valuable to bondholders, convertible bond issues have lower coupon payments than otherwise similar bonds that are not convertible Does this mean that a company can lower its cost of borrowing by selling convertible debt Explain ...

No While the interest coupon payments that the company must mak ...

Because the conversion feature in a convertible bond is valuable to bondholders, convertible bond issues have lower

Question:

Because the conversion feature in a convertible bond is valuable to bondholders, convertible bond issues have lower payments than otherwise similar bonds that are not convertible. Does this mean that a company can lower its cost of borrowing by selling convertible debt? Explain.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...