Exercise 7.3 DISTINGUISHING FINANCIAL LIABILITIES FROM EQUITY INSTRUMENTS (1) Company A issues 100 000 $1 convertible notes. The notes pay interest at 7%. The market rate for similar debt without the conversion option is 9%. The note is not redeemable, but it converts at the option of the holder into however many shares that will have a value of exactly $100 000. Required Determine whether this fi nancial instrument should be classifi ed as a fi nancial liability or equity instrument of Company A. Give reasons for your answer.