Chapter 5, Problem 1CC

a.

Summary Introduction

Case summary:

After the EFN analysis by person D for company ECY, person L have made a decision to expand the operations of the company. Person L have requested person D for enlisting the underwriters and a new finance construction. Person D have made a discussion with the underwriter R.

To identify: Effect of each of the below stated bond features on the coupon rate of the bond.

b.

Summary Introduction

To identify: The bond’s seniority.

c.

Summary Introduction

To identify: The sinking fund’s presence

d.

Summary Introduction

To identify: The call provision with specified dates and prices.

e.

Summary Introduction

To identify: The deferred call that accompanies the overall call provision.

f.

Summary Introduction

To discuss: A make-whole call provision.

g.

Summary Introduction

To discuss: The positive covenants.

h.

Summary Introduction

To discuss: The negative covenants.

i.

Summary Introduction

To discuss: The conversion feature.

j.

Summary Introduction

To discuss: The floating coupon rate.