How can knowledge of call options help a financial manager to better understand warrants and convertibles? Please provide references with your answer
Paul Duncan,
Because he expects earnings to continue rising sharply and looks for the stock price to follow suit, Mr. Duncan does not think it would be wise to issue new common stock at this time. On the other hand, interest rates are currently high by historical standards, and the firm's B rating means that interest payments on a new debt issue would be prohibitive. Thus, he has narrowed his choice of financing alternatives to (1)
As Duncan's assistant, you have been asked to help in the decision process by answering the following question.
How can knowledge of call options help a financial manager to better understand warrants and convertibles? Please provide references with your answer.
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