The total capital raised in a convertible bond issue

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Reference no: EM131011544

An analyst makes the following statement: “A firm should add the total capital raised in a convertible bond issue to its debt balance when estimating the cost of capital and should ignore the equity portion until the bonds have been converted, at which time the firm should add the proportion of equity issued to the total amount of its equity capital.” Assess this statement.

Reference no: EM131011544

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