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Business, 11.10.2020 23:01 Auttyrain7596

XYZ Corporation has a 6 1/2% convertible bond outstanding that is convertible into 40 shares of common stock. The bond is currently selling in the market at 85 ($850) and the common stock is selling at 21. The XYZ Corporation is offering its existing bondholders a new straight (nonconvertible) bond paying 6 1/2% that matures at the same time as the convertible bond. The effect of the successful completion of the proposal would be to: a) Reduce interest costs
b) Reduce potential dilution
c) Have no effect on interest costs
d) Increase dilution

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