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Convertible debt: Convertible debt is considered a win-win security for the issuing firm. If the bonds never convert then the company has issued debt at
Convertible debt: Convertible debt is considered a win-win security for the issuing firm. If the bonds never convert then the company has issued debt at a lower interest rate than if it had issued non-convertible debt. If the bonds convert they do so at a stock price higher than if the company had issued stock initially. If a security is win-win for the issuing company, is it lose-lose for investors? Explain why or why not.
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