Companies pay rating agencies to rate their bonds, and the costs can be substantial. However, companies are not required to have their bonds rated in the first place; doing so is strictly voluntary. So, why do they do it? b). Do bond ratings agencies have any conflict of interest when they rate bonds? Clearly explain your answer.
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A: Discount on bonds payable = Market rate - Contract rate
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A: The bond trustee has a fiduciary responsibility to act on behalf of the issuer.
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A: The answer for the theory question on junk bonds is discussed hereunder. Dear student, As you have…
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A: “Since you have posted multiple questions, we will solve first question for you. If you want any…
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A: bond is the debt instrument through which the firm raise capital for the project.
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A: The bonds are the financial instruments issued to raise money from the market.
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A: Yield to Maturity (YTM): It represents the rate at which the bond's total interest payments are…
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A: B Rated Bonds: These are bonds having a reasonable chance of default. Due to the high chance of…
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a). Companies pay rating agencies to rate their bonds, and the costs can be substantial. However, companies are not required to have their bonds rated in the first place; doing so is strictly voluntary. So, why do they do it?
b). Do bond ratings agencies have any conflict of interest when they rate bonds? Clearly explain your answer.
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- Which of the following is most correct? Treasury bonds carry high default risk because government has the option not to pay its indebtedness. Corporate bonds have lower interest rates compared with treasury bonds because bonds were issued with the aid of financial intermediaries. Corporate bonds have no default risk because they are backed by their corporate assets. Treasury bonds have lower interest rates because they are assumed to carry no default risk.Bonds are fixed income securities issued by public authorities, credit institutions, companies and supranational institutions in the primary markets. The most common process for issuing bonds is through underwriting. When a bond issue is underwritten, one or more securities firms or banks, forming a syndicate, buy the entire issue of bonds from the issuer and re-sell them to investors. The security firm takes the risk of being unable to sell on the issue to end investors. Securitized bank lending such as credit card debt, car loans or mortgages can be structured into other types of fixed income products such as asset-backed securities which can be traded on exchanges just like corporate and government bonds. Required: Compute the dirty value or price of a bond five years after it had been issued with the following structures: market rate for bonds is 15%, coupon rate is 10%, maturity period is 10 years and face value is K2000. 2. Explain what it means, to a Treasurer, when a bond is…To what extent does the company’s bond issuance policies support or hinder their strategies? For example, if the company is attempting to fund operating expenses, refinance old debt, or change its capital structure, are they issuing sufficient bonds to achieve these goals? Be sure to substantiate claims.
- To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential. For example: • A bond’s refers to the interest payment or payments paid by a bond. • A bond issuer is said to be in if it does not pay the interest or the principal in accordance with the terms of the indenture agreement or if it violates one or more of the issue’s restrictive covenants. • The contract that describes the terms of a borrowing arrangement between a firm that sells a bond issue and the investors who purchase the bonds is called . • A bond’s gives the issuer the right to call, or redeem, a bond at specific times and under specific conditions. Suppose you read an article about the Golden Gate Bridge and Highway District bonds. It includes the following information: Bridge Bonds Series A Dated 7-15-2005 4.375% Due 7-15-2055 @100.00 What is the issuing date of this bond? 7-15-2005 7-15-2055…Discuss the functioning and merits of callable and puttable bonds from an investor’s perspective. Discuss how the price of a puttable bond will differ from the price of a similar, plain vanilla bond and the main determinants of this price difference. In which market environment does the issuance of a callable bond make more sense from a corporate issuer’s perspective?Which of the following statements relating to bonds is incorrect? a. A bond is a debt instrument giving the issuer flexibility as to maturity date. b. None of the choices c. A bond’s face value is the amount the issuer must pay to the bondholder at maturity d. The owner of a registered bond is the person to whom interest payments are mailed. e. A bond will typically sell at a discount when its nominal rate is less than the current market rate of interest
- when are corporations likely they called the Bonds? A. When the market interest rate is higher than the contract rate, b. When the contract rate is higher than the market rate. C. When their bonds at selling at par with market d. When standard and poor are bullish about treasury bills E. None of the aboveWhy would a company wish to reduce its bond indebtedness before its bonds reach maturity? Indicate how this can be done and the correct accounting treatment for such a tBonds that are rated less than investment grade by bond-rating agencies is: a. Sovereign bonds b. Corporate bonds c. Junk bonds d. Contingency bonds
- Which of the following statements relating to bonds is incorrect? A. A bond’s face value is the amount the issuer must pay to the bondholder at maturity. B. The owner of a registered bond is the person to whom interest payments are mailed. C. A bond will typically sell at a discount when its nominal rate is less than the current market rate of interest. D. A bond is a debt instrument giving the issuer flexibility as to maturity date.Which of the following is a disadvantage to a corporation issuing bonds? Group of answer choices A)The required interest payment must be met each period. B)The liquid nature of the bonds makes them attractive to investors who may not want to hold them to maturity. c)The large principal payment due at maturity. d)Both the first and third answers above are both disadvantages. e)The first, second and third answers above are all disadvantages.Are government bonds ALWAYS less risky than corporate bonds? If yes, please explain. If no, please explain and give an example of an industry whose bonds are less risky then the government's