Convertible debt and straight debt issued with warrants are similar securities$,$ because both are debt securities that represent potential equity claims on the issuer's assets. In fact, convertible debt can be thought of as straight debt plus nondetachable warrants. However, several important distinctions do exist.

In the following table, indicate whether the characteristic listed refers to convertible bonds or to stock warrants.

$\backslash$table$[[$Characteristic$,\backslash$table$[[$Convertible$],[$Bonds$]]],[$When exercised, the issuing firm receives new equity capital.,$],[$Warrants$,]]$

If a firm does not grow as expected subsequent to convertible or bond$-$with$-$warrant issues, does that make it more or less likely that the securities will be converted or exercised?

More likely to be converted or exercised

Less likely to be converted or exercised