Which of the following is not a dominant risk that might affect the price of a bond?   A Deferred interest B Board of Directors’ approval of CEO purchase of corporate jet C Step-up D Payment-in-kind

Defining common stock yield and its importance to investors Define and explain a bond yield's importance. What makes a stock investor different from a bond investor? What are their expectations? What are investors' alternatives if no common dividend is paid? What alternatives do bondholders have if interest payments are missed?

Can I use the yield to maturity (YTM) on a bond issued by the company as the cost of debt?     A Yes, you can use the YTM B No, you cannot use the YTM C Only if the bond is liquid and has not special feature embedded in it D There is not enough information to answer this problem

1. Why do high yield fixed income investors favor PIK bonds for companies who are about to enter a restructuring

Which of the following is not an effect of a call provision? A. Issuer can refund the bond issue if rates decline. B. Requires the issuer to pay off the loan over its life rather than all at maturity. C. Bond investors require higher yields on callable bonds D. Upon calling bonds the issuer must pay call premium to bond holder E. All of the above are effects of a call provision

Explain why company managers might choose to issue zero-coupon bonds instead of interest-bearing bonds or coupon bonds instead of zero- coupon bonds? Give pros and cons of each. Be sure to consider the situation from the bond issuer's viewpoint and not the bondholder.