PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Textbook Question
Chapter 14, Problem 9PS
Corporate debt* Which of the following features would increase the value of a corporate bond? Which would reduce its value?
- a. The bond is convertible into shares.
- b. The bond is secured by a mortgage on real estate.
- c. The bond is subordinated.
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Which ot the following features would decrease the value of a corporate bond?
A.The bond is sinior debt obligation
B.The bond is convertible into shares
C.The bond is secured by a mortgage on real estate
D.The borrower has the option to repay the loan before maturity
a. Explain what a corporate bond isb. Outline the characteristics of the bond marketd. Explain the benefits of issuing bonds to raise financing
Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a company. Bonds require payment of periodic interest.
Chapter 14 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 14 - Terminology Fill in the blanks, using the...Ch. 14 - Prob. 2PSCh. 14 - Sources of funds True or false? a. Net stock...Ch. 14 - Prob. 4PSCh. 14 - Company ownership What do we mean when we say that...Ch. 14 - Prob. 6PSCh. 14 - Prob. 7PSCh. 14 - Prob. 8PSCh. 14 - Corporate debt Which of the following features...Ch. 14 - Financial markets and intermediaries. True or...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- What is a call provision? Why do companies often include call provisions on bond issues?arrow_forwardBond Valuation Theory Question 2 Securities issued by Corporations are classified as either debt or equity securities. What are bonds classified as? What are the main differences between debt and equity?arrow_forward1 a. Describe intercompany bonds. b. Explain how to eliminate intercompany bonds on the company’s financial statements.arrow_forward
- What is the difference between annuities and corporate bonds?arrow_forwardBonds that pay no interest unless the issuing company is profitable are called Select one: O a. income bonds. O b. collateral trust bonds. Oc revenue bonds. O d. debenture bonds.arrow_forwardWhat is a bond? Why might a company elect to sell bonds rather than borrow from a bank?arrow_forward
- Also, the total interest on the corporate bondarrow_forward______________ allows the investor to transform debt into equity under certain circumstances. a. Equity shares b. Non-convertible bonds c. Equity debentures d. Convertible bondarrow_forwardWhat is the difference between a corporate bond and a registered bond?arrow_forward
- What is the role of a surety company when it comes to bonds?arrow_forwardIdentify the following as either an advantage (A) or a disadvantage (D) of bond financing for a company. Bonds require payment of par value at maturity.arrow_forwardWhy might a company choose to raise money through bonds, rather than take out a note payable or issue stock? What are the advantages and disadvantages of bonds? What does it mean to issue a bond at a "premium" or at a "discount"?arrow_forward
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