CORPORATE FINANCE (LL)-W/ACCESS
11th Edition
ISBN: 9781259976360
Author: Ross
Publisher: MCG
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Textbook Question
Chapter 15, Problem 15CQ
Sinking Funds Sinking funds have both positive and negative characteristics for bondholders. Why?
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A sinking fund call on a bond:
What is a bond sinking fund? What is the purpose of establishing a sinking fund? Are bonds that provide for a sinking fund regarded as being risker than those without this type of provision? Explain.
A sinking fund can be set up in one of two ways. Discuss the advantagesand disadvantages of each procedure from the viewpoint of both the firmand its bondholders.
Chapter 15 Solutions
CORPORATE FINANCE (LL)-W/ACCESS
Ch. 15 - Bond Features What are the main features of a...Ch. 15 - Prob. 2CQCh. 15 - Preferred Stock Preferred stock doesnt offer a...Ch. 15 - Preferred Stock and Bond Yields The yields on...Ch. 15 - Prob. 5CQCh. 15 - Call Provisions A company is contemplating a...Ch. 15 - Prob. 7CQCh. 15 - Preferred Stock Do you think preferred stock is...Ch. 15 - Long-Term Financing As was mentioned in the...Ch. 15 - Internal versus External Financing What is the...
Ch. 15 - Prob. 11CQCh. 15 - Classes of Stock Several publicly traded companies...Ch. 15 - Callable Bonds Do you agree or disagree with the...Ch. 15 - Bond Prices If interest rates fall, will the price...Ch. 15 - Sinking Funds Sinking funds have both positive and...Ch. 15 - Prob. 1QPCh. 15 - Prob. 2QPCh. 15 - Prob. 3QPCh. 15 - Prob. 4QPCh. 15 - Financial Leverage Kiedis, Corp., has...Ch. 15 - Financial Leverage Frusciante, Inc., has 290,000...Ch. 15 - Financial Leverage Harrison, Inc., has the...Ch. 15 - Valuing Callable Bonds KJC, Inc., plans to issue 5...Ch. 15 - Valuing Callable Bonds New Business Ventures,...Ch. 15 - Valuing Callable Bonds Bowdeen Manufacturing...Ch. 15 - Prob. 11QPCh. 15 - Prob. 12QP
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- A sinking fund can be set up in one of two ways. Discuss the advantages and disadvantages of each procedure from the viewpoint of both the firm and its bondholders.arrow_forwardInvestors have no control over ________________ distributions when investing in mutual funds. a) capital gain b) domestic yields c) inflationaryarrow_forwardWhat are the advantages and disadvantages of buying bonds mutual funds?arrow_forward
- Balanced funds, life-cycle funds, and asset allocation funds all invest in both the stock and bond markets. What are the differences among these types of funds?arrow_forwardWhich of the following statements is CORRECT? a. Sinking fund provisions never require companies to retire their debt; they only establish "targets" for the company to reduce its debt over time. b. Most sinking funds require the issuer to provide funds to a trustee, who holds the money so that it will be available to pay off bondholders when the bonds mature. c. Sinking fund provisions sometimes turn out to adversely affect bondholders, and this is most likely to occur if interest rates decline after the bond was issued. d. If interest rates increase after a company has issued bonds with a sinking fund, the company will be less likely to buy bonds on the open market to meet its sinking fund obligation and more likely to call them in at the sinking fund call price. e. A sinking fund provision makes a bond more risky to investors at the time of issuance.arrow_forwardCommission for raising funds via the bond and equity markets is an example of floatation costs. True or Falsearrow_forward
- Compare raising cash funds in the capital market (selling new shares of stock) versus the bond market (debt financing), and what is best and why.arrow_forwardHow can bondholders protect themselves from managers’ actions that negativelyimpact bondholders?arrow_forwardWhy are mutual funds considered good investments for long-term investors?arrow_forward
- What are some major differences between a UITF and a Mutual Fund?arrow_forwardWould you expect a typical open-end fixed-income mutual fund to have higher or lower operating expenses than a fixed-income unit investment trust? Why?arrow_forwardA bondissuer is lending money; a bondholder is borrowing money. Select one: True Falsearrow_forward
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