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Foundations Of Financial Management
Found in: Page 524
Foundations Of Financial Management

Foundations Of Financial Management

Book edition 16th
Author(s) Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Pages 768 pages
ISBN 9781259277160

Short Answer

What method of “bond repayment” reduces debt and increases the amount of common stock outstanding? (LO16-3)

The conversion method of bond repayment increases the common stock.

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Step by Step Solution

Bond repayment

Bond repayment refers to how a corporation repays its outstanding bonds through various methods such as serial payments and sinking funds provisions.

Repayment method that increases the common stock

The conversion method reduces the debts and simultaneously increases the amount of outstanding common stock.

Under this method, bonds are converted into common stocks.

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