Which of the following lowers the required interest rate that firms have to pay on their bonds? Which of the following raise the interest that firms have to pay? Private placements Public offerings Sinking fund provisions Protective Covenants Call provisions Collateral An active secondary market A low credit rating

Which of the following lowers the required interest rate that firms have to pay on their bonds? Which of the following raise the interest that firms have to pay? Private placements Public offerings Sinking fund provisions Protective Covenants Call provisions Collateral An active secondary market A low credit rating

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 8Q

See similar textbooks

Similar questions

____ occurs when a firm calls a relatively high interest rate issue and replaces it with a lower interest rate issue. a. Bond refunding b. A call feature c. A sinking fund d. Indenture refinancing
Banks use gap analysis to measure interest rate risk in their balance sheets. If firm XYZ is said to have a positive gap, this means: Group of answer choices C. Rate-sensitive assets exceed rate-sensitive liabilities B. Long-term assets are funded with short-term liabilities D. Rate-sensitive assets equal rate-sensitive liabilities A. Liabilities reprice before assets
Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a company. A company earns a lower return with borrowed funds than it pays in interest.
Which of the following is most likely to expose the holders to counterparty credit risk? A. open-end mutual funds B. closed-end mutual funds C. ETNs D. ETFs
Which of the following is the worst measure of the cost of debt? Estimating Interest Rate based on Synthetic Bond Rating O Estimating Interest Rate based on Actual Bond Rating Current Bank Loan Rate Interest rate of Outstanding Bonds
1. Should financial institutions invest in junk bonds? 2. Explain the use of call provisions on bonds. How can a call provision affect the price of the bond?3. What are protective covenants? Are they needed? Explain why.
(i) ‘Debt finance is less expensive than equity finance’ Explain (ii) Explain the following: Debenture Convertible bonds Mezzanine debt Syndicated loans
Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a company. a. Requires payments of both periodic interest and par value at maturity. b. Bonds require payment of par value at maturity. C. Bonds do not affect owner control. d. A company earns a lower return with borrowed funds than it pays in interest. e. A company earns a higher return with borrowed funds than it pays in interest. f. Bonds require payment of periodic interest.
(please correct and incorrect option explain) Which of the following statements is correct? Credit spreads decrease with volatility Credit spreads increase with volatility Credit spreads do not depend on volatility The relation between credit spreads and volatility is nonlinear Which of the followings is not an important determinant of bond credit ratings? corporate governance risk business risk interest rate risk financial risk
If a new competitor with scale enters, does that increase, decrease, or have no effect on the credit spread for a corporate bond?
Which of the following is an advantage of debt financing? a. Excessive debt increases the risk of equity holders and therefore depresses share price. b. The obligation is generally fixed in terms of interest and principal payments. c. Interest and principal obligations must be paid regardless of the economic position of the firm. d. Debt agreements contain covenants.
Which of the following can be categorized as Short term sources of finance ?i Equity Sharesii Trade Creditiii Debentureiv Money Market Instruments a.Only Equity Shares b.Both Equity Shares and Debentures c.Only Money Market Instruments d.Both Money Market Instruments and Trade Credit