PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 24, Problem 11PS
Sinking funds For each of the following sinking funds, state whether the fund increases or decreases the
- a. An optional sinking fund operating by drawings at par.
- b. A mandatory sinking fund operating by drawings at par or by purchases in the market.
- c. A mandatory sinking fund operating by drawings at par.
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Chapter 24 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 24 - Bond terms Use Table 24.1 (but not the text) to...Ch. 24 - Bond terms Look at Table 24.1: a. The AMAT bond...Ch. 24 - Bond terms Select the most appropriate term from...Ch. 24 - Prob. 5PSCh. 24 - Bond terms Bond prices can fall either because of...Ch. 24 - Security and seniority a. As a senior bondholder,...Ch. 24 - Prob. 8PSCh. 24 - Prob. 9PSCh. 24 - Security and seniority a. Residential mortgages...Ch. 24 - Sinking funds For each of the following sinking...
Ch. 24 - Call provisions a. Look at Table 24.1. Suppose...Ch. 24 - Covenants Alpha Corp. is prohibited from issuing...Ch. 24 - Prob. 14PSCh. 24 - Private placements Explain the three principal...Ch. 24 - Convertible bonds True or false? a. Convertible...Ch. 24 - Convertible bonds Maple Aircraft has issued a 4%...Ch. 24 - Convertible bonds The Surplus Value Company had 10...Ch. 24 - Prob. 19PSCh. 24 - Convertible bonds Iota Microsystems 10%...Ch. 24 - Convertible bonds Zenco Inc. is financed by 3...Ch. 24 - Prob. 22PSCh. 24 - Prob. 23PSCh. 24 - Bank loans, commercial paper, and medium-term...Ch. 24 - Prob. 25PSCh. 24 - Tax benefits Dorlcote Milling has outstanding a 1...Ch. 24 - Convertible bonds This question illustrates that...Ch. 24 - Prob. 28PS
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- The _________ of an open-end fund provides the only market for buying or selling the shares of the fund. primary market investment banker secondary market issuing companyarrow_forwardA 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_forwardThe net asset value of a mutual fund is calculated as ___ A) the number of shares outstanding B) the value of PPE C) the total market value of all securities held in the fund's portfolio D) the original cost of all securities held in the fund's portfolio divided by ____. A) the number of shares outstanding B) the value of PPE C) the total market value of all securities held in the fund's portfolio D) the original cost of all securities held in the fund's portfolioarrow_forward
- All else held constant, which one of the following bonds is likely to have the highest required rate of return? a. AAA-rated noncallable corporate bond with a sinking fund b. AA-rated callable corporate bond with a sinking fund c. AAA-rated callable corporate bond with a sinking fund d. High-quality municipal bond e. AA-rated callable corporate bond without a sinking fund Clear my choicearrow_forwardProprietary fund financial statements are prepared based on which one of the following basis of accounting? a. Cash basis of accounting b. None of the options c. Modified accrual basis of accounting d. Accrual basis of accountingarrow_forward1, The establishment of a bond sinking fund is required at all times to settle bond liability. A. TRUE B.FALSE . 2. How would the amortization of premium on bonds payable affect each of the following? * a. Increase carrying value; Increase net income b. Decrease carrying value; Decrease net income c. Increase carrying value; Decrease net income d. Decrease carrying value; Increase net income . 3.The value of the warrants attached to a debt security (detachable) is accounted as: a. A separate portion of share premium b. Liability c. An appropriation of retained earnings d. A part of share capitalarrow_forward
- What is the maximum percentage (%) of net assets of a mutual fund that can be invested in derivatives (except for specific funds that have received an exemption from this rule)? 1.0% 2.10% 3.25% 4.50%arrow_forwardMutual funds can effectively charge sales fees in one of three ways: front-end load fees, 12b-1 (i.e., annual) fees, or deferred (i.e., back-end) load fees. Assume that the SAS Fund offers its investors the choice of the following sales fee arrangements: (1) a 4% front-end load, (2) a 0.50% annual deduction, or (3) a 2% back-end load, paid at the liquidation of the investor's position. Also, assume that SAS Fund averages NAV growth of 11% per year. If you start with $100,000 in investment capital, calculate what an investment in SAS would be worth in three years under each of the proposed sales fee schemes. Which scheme would you choose? Do not round intermediate calculations. Round your answers to the nearest cent. Scheme 1: Scheme 2: Scheme 3: Choose: If your investment horizon were 10 years, would your answer in Part a change? Do not round intermediate calculations. Round your answers to the nearest cent. Scheme 1: Scheme 2: Scheme 3: Choose:arrow_forwardThe coupon rate of a bond is typically __________.a. fixed at the time of bond issuanceb.subject to change based on the federal funds ratec.zero in the case of zero - coupon bondsd. Both A and Carrow_forward
- Banks raise funds options A Only from deposits B From deposits and from issuing bonds C From deposits, from issuing bonds and from short-term securities D From deposits, from issuing bonds, from short-term securities and from equity sharesarrow_forwardOwnership of mutual fund shares represents A) ownership of one share of every securite in the portfolio B) ownership of a pro rate share of every security in the portfolio C) a senior claim on the portfolio assets D) a residual claim on the portfolio assetsarrow_forwardBond premium should be reported in the statement of financial position A. at the present value of the future reduction in bond interest expense due to the premium. B. as a direct addition to the face amount of the bonds. C. as a deferred credit. D. along with other premium accounts such as those resulting from share capital transactions.arrow_forward
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