4. Financing with convertibles Aa Aa Just like any financing security, convertibles have certain advantages and disadvantages. Based on your understanding of using convertibles for financing, identify whether each of the features listed in the following table is an advantage or a disadvantage from an issuer's standpoint: Advantage Disadvantage Feature When investors exercise convertibles, the company loses the cost benefit on debt that it had when it issued the convertible security. Companies can sell common stock at a price higher than the current stock price using convertibles. Convertibles help companies sell bonds at low interest rates. Considering the pros and cons of convertible securities, under which of the following two situations is a company likely to issue convertibles? When the issuing company needs to raise equity financing but feels the market price of its stock is selling above the fair value of the stock When the issuing company needs to raise equity financing but feels the market price of its stock is selling under the fair value of the stock