QUESTION 16

All of the following statements are advantages of convertible preference shares to the investor, except:

a. In the case of decreasing stock prices, returns on convertible preference shares are more secured than those of common shares.

b. In the case of decreasing value of common shares, the value of convertible preference shares increases.

c. In the case of a firm's unprofitable operations, he investor can avoid in sharing of firm losses by holding his preference shares, instead of converting them to common shares.