Please indicate true or false for the following $(2$ points each$)$:

a$.$ The "preferred" feature of preferred stock means that it normally will provide a higher

expected return than will common stock.

b$.$ The cost of preferred stock should be lower than the cost of convertible bond because

preferred stock is more like debt than the convertible bond.

c$.$ The problem of dilution of stockholders' earnings can arise if warrants are used.

d$.$ A bond with warrant is similar to a convertible bond in that both have embedded call

options on stock.

e$.$ A warrant is not a form of hybrid financing.

f$.$ Within a company, coupon rates for bond with warrants and convertible bonds are always

lower than the coupon rate for straight debt.

g$.$ Cost of a convertible bond is known at the time of issuance.

h$.$ If the stock price increases dramatically, investors of a bond with warrant is better off

exercising the warrant than to sell the warrant in the open market.

i$.$ Floor value of a convertible bond is the minimum of the straight debt value and the

conversion value.

j$.$ One important difference between issuing warrants and issuing convertibles is that

convertibles bring in additional funds when they are converted but exercised warrants do

not.