Question
A company can raise funds in the nature of owned or
borrowed capital, through various financial instruments. Which of the following financial instrument enables a company to raise long term borrowed funds while giving the investor an option to convert it into equity?ÂSolution
Convertible debentures are hybrid financial instruments (long-term debt with equity features) issued by companies to raise capital, giving the holder the option to convert them into the company's equity shares after a set period. These instruments act as both a lender and potential part-owner, offering fixed interest plus potential stock appreciation while lowering risk than pure debt.Â
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- Artificial Intelligence
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