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
tRUE or FALSE One of several reasons that companies might choose to issue bonds is to shift their capital structure from more equity ownership to more borrowing?
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_forwardThe cash interest payment a corporation makes to its bondholders is based on ________. A. the market rate times the carrying value B. the stated rate times the principal C. the stated rate times the carrying value D. the market rate times the principalarrow_forwardHow are savings bonds different from a corporate bond?arrow_forward
- A debenture is ________. A. the interest paid on a bond B. a type of bond that can be sold back to the issuing company whenever the bondholder wishes C. a bond with only the companys word that they will pay it back D. a bond with assets such as land to back their word that they will pay it backarrow_forwardWhat are convertible bonds? How do they protect bondholders against expropriation by stockholders.arrow_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_forward
- Which of the following is correct? A. Bonds maturing at a specified single date are called ordinary bonds. B. Equity securities and debt securities differ only in their effect on a company’s cash flow. C. One purpose in holding bonds as a long-term investment is to provide the investor a voting voice in the management of the issuing company. C. On bonds, the yield rate and the nominal rate of interest are always different.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_forwardFinance A corporation can raise money by selling stocks and/or bonds. From an investor's perspective, what is the difference between a bond and stock? O 1. If an investor owns a corporate bond, the investor owns a part of the company. O 2. A corporation guarantees interest payments to a bond investor but does not guarantee dividend payments to stock investor. O 3. A corporation guarantees dividend payments to a stock investor but does not guarantee interest payments to bond investor. O4. Stocks can appreciate in value, bonds do not change value.arrow_forward
- Which of the following is not a dominant risk that might affect the price of a bond? A Deferred interest B Board of Directors’ approval of CEO purchase of corporate jet C Step-up D Payment-in-kindarrow_forwardIdentify the following as either an advantage (A) or a disadvantage (D) of bond financing for a company. Bonds do not affect owner control.arrow_forwardWhat is a bond? A. It is a security that represents partial ownership in a business. B. It is a security that represents the debt of a government or a business that promises to pay a fixed amount. C. It is a security that represents the equity of a government or a business that promises to pay a fixed interest. D. None of the abovearrow_forward
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