Question:
Many of the small "dot-com" companies got financing in the form of an instrument called convertible debt. This is like ordinary debt, in that it pays a regular interest amount. But debt-holders have the right to convert it to equity. Why do you think these companies chose this instrument? Do you think it was a good idea?
Remember: there's no 'free lunch'. If a company offers creditors an option to convert the bond into stocks it must be giving them something of value. It should get something in return.