Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 20, Problem 4CQ
Summary Introduction
To explain: The reason for underpricing being not a great concern with the offering of bonds.
Bond:
Bond refers to the securities, which are traded in public to raise the capital when needed. It is an investment with a fixed income, where an investor gives money to an entity or individual for a specified period of time at a fixed rate.
Underpricing:
The term underpricing refers to the offering of the stocks or the bond at a low price than before. The stocks or the debt are said to be underpriced when they are traded at a lower price than on which it was issued first for trade.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Why is under-pricing not a great concern with bond offerings?
How does equity valuation differ from bond valuation?
Why do noninvestment-grade bonds have much higher direct costs than investment-grade issues?
Chapter 20 Solutions
Corporate Finance
Knowledge Booster
Learn more about
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 are the potential problems or limitations of using methods, to estimate the cost of debt, that relies on bond ratings?arrow_forwardwhat is an unrealized holding gain or loss on trading debt investments ?arrow_forwardwhich of the below has a negative correlation with the return on bonds ? a. Taxability b. Default risk c. Callable bonds d. Liquidity e. Debenturearrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning