This part of question 3 asked for a discussion of the attractions of convertible debt compared to a bank loan of similar maturity. Since the question asked for a discussion of the relative merits of two kinds of debt, no credit was given for discussion of the relative attractions of debt and equity. Several points that could have been discussed are covered in the suggested answer to this question, such as self-liquidation, lower interest rate and increase of debt capacity on conversion. Answers that failed to gain good marks on this question were those that did not show an understanding of such points.