Advantages and Disadvantages of Convertible Debt
In the previous article, we studied the concept of convertible debt and some of the common terms which are used while discussing convertible debt. In this article, we will have a closer look at some of the advantages and disadvantages of using this form of debt.
Advantages of Using Convertible Debt
Many companies continue to use convertible debt. This is because it provides several advantages over plain vanilla debt bonds. The advantages have been explained in detail in this article:
Disadvantages of Convertible Debt
Every financial instrument has its own pros and cons and convertible debt is no exception either. Some of the common disadvantages associated with convertible debt have been mentioned below:
Hence, it would be fair to say that convertible debt offers a lot of advantages to certain types of firms. The disadvantages can also be significant. However, if a company is able to plan ahead, then it may be able to mitigate some of the risks that result from convertible debt.
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