3. (TCO 5) From the corporate financial officer\'s viewpoint, which of the follo

Question

3. (TCO 5) From the corporate financial officer's viewpoint, which of the following is a reason for not calling a bond for redemption when the conversion value is above the par value? (Points : 4)
Calling the bond may encourage everyone to take the stock rather than the par value in cash.
The after-tax cost of the dividends on the new shares might be higher than the after-tax cost of the interest expense on the existing convertible bond.
The chief financial officer might want to wait until interest rates decline before calling the bond.
The number of new shares on the market will cause the diluted earnings per share to decline.


4. (TCO 5) _____ was the first organized exchange to trade options, in 1973. (Points : 4)
The New York Stock Exchange
The American Exchange
The Chicago Board Option Exchange
The International Securities Exchange

Explanation / Answer

The number of new shares on the market will cause the diluted earnings per share to decline. The New York Stock Exchange (I GUESS IN THIS)

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