Final Exam Solution Essay

(d) $1 billion 10 year debenture @ 7.5% with 18.18 warrants at $ 55 exercisable until 1988.

Thibodeaux, W. (2017, April 19). Advantages & Disadvantages to Issuing Bonds in Order to Raise Capital. Retrieved from Pocket Sense: https://pocketsense.com/advantages-disadvantages-issuing-bonds-order-raise-capital-3899.html

e) What decisions needed to be made during the trading session? Were these successful decisions?

(TCO A) On July 1, 2010, an interest payment date, $60,000 of Parks Co. bonds were converted into 1,200 shares of Parks Co. common stock, each having a par value of $45 and a market value of $54. There is $2,400 unamortized discount on the bonds. Using the book value method, Parks would record

Jan. 1 Purchased 50 8%, $1,000 Choate Co. bonds for $50,000 cash plus brokerage fees of

C. qualify under Sec. 351 if Matt can show the sale to Paul was not part of a prearranged plan

Why does the longer-term bond’s price vary more than the price of the shorter-term bond when interest rates change?

d. What explains the behavior of the NYT institutional shareholders – not just Morgan Stanley but also Private Capital Management, T Rowe Price and Vanguard?

1.  What are the two ways Countrywide – or any mortgage lender - made money?

3. Personal share in WSO had been bought back by Ron Weiner after Dave’s resign at cost

The preferred stock is differed from common stock when a company goes bankrupt, preferred stockholders enjoy priority distribution of the company's assets, while holders of common stock don't receive corporate assets unless all preferred stockholders have been compensated (bond investors take priority over both common and preferred stockholders). Meanwhile, the preferred stock is differed from corporate bonds because they are vary in price for different reasons. If company earnings grow, the stock is almost certain to rise over time. The price of bonds depends on the prevailing interest rates. If interest rates rise, a bond becomes less attractive because it pays a fixed rate and the price will fall. Conversely, if interest rates fall, the bond price is likely to rise. Bonds are rated based on risk (how likely it is the issuer will be able to repay the bond at maturity). A

Consequently, the shift in business strategy required the purchase of storage facilities and equipment to transport documents to and from said facilities (Bruns, 2010). Therefore, to finance the new business direction the company issued $10 million in 20-year term bonds in 1999. Said bonds were issued at a coupon rate of 8% and sold at a 9% market rate. Additionally, the organization was advised in 2008 that said bonds could be redeemed early and reissued at lower interest rates; saving the organization substantial costs in interest payments. As such, company president David Lyons instructed employee Rene Cook to research said opportunity and provide information regarding the effect of early redemption of said bonds.

If a share issue is oversubscribed, what action can be taken in relation to excess money received on application?

There are number reasons a corporation may consider convertible bond issuance. The instrument itself is a bond that may be converted to another type of security at the company that issued the bond. Converting such an item is all left up to the discretion of the bondholder. The reason for a company to want to issue such an item of course would always be in the best interest of the company itself for doing so. Convertible bonds are considered what is known as a hybrid security where it is considered to be both debt and equity by the issuing company (Saunders & Cornett, 2015, p. 185).

- Bonds carry interest which is also called Coupons that are paid to the bond holder (for using his money)