Business
Business, 26.06.2020 22:01, IzzybellaRamilo

A company issues bonds saying that it will use the proceeds for a safe investment. Instead, it uses the proceeds for a risky investment. Which of the following statements is true about this situation. a. This will cause bondholders to convert their bonds to stock. b. This will result in a decrease in the value of the equity because the company is riskier. c. This will result in a decrease in the value of the debt because the company is riskier. d. This will result in a lawsuit from the stockholders because it is bait and switch. e. Dividends will go up to compensate shareholders for their increased risk.

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A company issues bonds saying that it will use the proceeds for a safe investment. Instead, it uses...

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