Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Textbook Question
Chapter 24, Problem 1P
Explain some of the differences between a public debt offering and a private debt offering.
Expert Solution & Answer
Summary Introduction
To discuss: The difference between a public debt offering and a private debt offering.
Introduction: Debt offering happens when a company issues debt; it is basically a loan from an investor who purchases deb. The investor receives a promise or commitment that the debt issuer will pay some type of interest to the debt holder and, at a later date, pay back the principal payment to the investor.
Explanation of Solution
The difference between a public debt offering and a private debt offering is as follows:
A private debt offering is held in private to a select group of investors. Since the bonds are not public, the financial information is not required to be published and they do not require a credit rating. On the other hand, public debt offering is where a company publicizes their upcoming debt offering information like date, time, place and various types of security offerings to the public and potential investors. Financial information must be published annually to the public for a public debt offering. These public debt offerings are very competitive, so it requires credit rating in order for the investor to easily understand the debt creditworthiness of the public debt offering.
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Chapter 24 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 24.1 - List four types of corporate debt that are...Ch. 24.1 - Prob. 2CCCh. 24.2 - Prob. 1CCCh. 24.2 - Prob. 2CCCh. 24.2 - What is an asset-backed security?Ch. 24.3 - Prob. 1CCCh. 24.3 - Prob. 2CCCh. 24.4 - What is a sinking fund?Ch. 24.4 - Do callable bonds have a higher or lower yield...Ch. 24.4 - Prob. 3CC
Ch. 24 - Explain some of the differences between a public...Ch. 24 - Why do bonds with lower seniority have higher...Ch. 24 - Explain the difference between a secured corporate...Ch. 24 - Prob. 4PCh. 24 - Prob. 5PCh. 24 - Suppose on January 15, 2013, the U.S. Treasury...Ch. 24 - Prob. 7PCh. 24 - Describe what prepayment risk in a GNMA is.Ch. 24 - Prob. 9PCh. 24 - Explain why bond issuers might voluntarily choose...Ch. 24 - General Electric has just issued a callable...Ch. 24 - Prob. 12PCh. 24 - Explain why the yield on a convertible bond is...Ch. 24 - Prob. 14P
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