5. 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: Feature Advantage Disadvantage When investors exercise convertibles, the company losesO the cost benefit on debt that it had when it issued the convertible security. Convertibles help companies sell bonds at low interest rates. If a company needs capital and wants to issue new stock but the current stock price is undervalued, the company can use convertibles to sell stock at a predetermined price. Considering the pros and cons of convertible securities, under which of the following two situations is a company likely to issue convertibles? O When issuing new stock could have a positive signaling effect on investors O When issuing new stock could have a negative signaling effect on investors