You are an investment analyst for De Caul’s Investments Inc., an independent financial consulting firm. Your latest assignment is to provide an independent assessment of RBL. RBL is a Caribbean-based company that manufactures building products and provides services for the construction and engineering sectors. The company has several divisions which operate as separate entities.
The case study analysis consists of a core section, The Bond Market and you will have to either conduct research or perform calculations. The assessment must be completed within five days because a meeting has been scheduled with the client to discuss your findings.
RBL’s directors are looking to expand into a new suite of services. Although they are doing quite well in their existing lines of business, analysts have identified some new areas for development. One of these is expansion into manufacturing prefabricated homes. However, this venture requires a large amount of funding. To raise additional funds to fiancé this new project, the company is considering issuing a new bond.
Required: Prepare a short report which supports the case for issuing a corporate bond. In your report,
- Explain what a corporate bond is,
- Outline the characteristics of the bond market,
- Explain the benefits of issuing bonds to raise financing.
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