notes for dilutuve securities.docx - Convertible bonds can be changed into other corporate securities during some period of time after issuance A

notes for dilutuve securities.docx - Convertible bonds can...

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Convertible bonds can be changed into other corporate securities during some period of time after issuance. A convertible bond combines the benefits of a bond with the privilege of exchanging it for stock at the holder’s option. Stock warrants allow holders the right to purchase stock at a given price. Stock warrants can be issued when preferred stocks or bonds are issued in order to make the purchase more attractive. In addition, they are used for preemptive rights and as stock options for executives and employees. The convertible bond is accounted for as one separate security. Warrants, on the other hand, when attached to a security, are accounted for as two separate securities. The rationale for the
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