CNCT ACC CORPORATE FINANCE
CNCT ACC CORPORATE FINANCE
12th Edition
ISBN: 9781264604081
Author: Ross
Publisher: MCGRAW-HILL HIGHER EDUCATION
Question
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Chapter 8, Problem 1MC

A

Summary Introduction

Adequate information:

Larissa has chosen to increase the activities of East Coast Yachts as a result of Dan's EFN research. To finance the new building, she has requested Dan to help sell million in brand-new-year bonds with the help of an underwriter. Dan has started talking with Kendahl Shoemaker from Crowe & Mallard about the bond features East Coast Yachts should take into account and the expected coupon rate for the issue. Dan is aware of bond features, but he is unsure of the advantages and disadvantages of some of them. As a result, he is unsure of how each feature will affect the bond issue's coupon rate. Write a message to Dan outlining the impact of each of the following bond characteristics on the bond's coupon rate. Include any pro or con aspects of each feature in your list.

To compute: The security of the bond, that is, whether or not the bond has collateral.

B

Summary Introduction

Adequate information: Larissa has chosen to increase the activities of East Coast Yachts as a result of Dan's EFN research. To finance the new building, she has requested Dan to help sell million in brand-new-year bonds with the help of an underwriter. Dan has started talking with Kendahl Shoemaker from Crowe & Mallard about the bond features East Coast Yachts should take into account and the expected coupon rate for the issue. Dan is aware of bond features, but he is unsure of the advantages and disadvantages of some of them. As a result, he is unsure of how each feature will affect the bond issue's coupon rate. Write a message to Dan outlining the impact of each of the following bond characteristics on the bond's coupon rate. Include any pro or con aspects of each feature in your list.

To compute: The seniority of the bond

C

Summary Introduction

Adequate information: Larissa has chosen to increase the activities of East Coast Yachts as a result of Dan's EFN research. To finance the new building, she has requested Dan to help sell million in brand-new-year bonds with the help of an underwriter. Dan has started talking with Kendahl Shoemaker from Crowe & Mallard about the bond features East Coast Yachts should take into account and the expected coupon rate for the issue. Dan is aware of bond features, but he is unsure of the advantages and disadvantages of some of them. As a result, he is unsure of how each feature will affect the bond issue's coupon rate. Write a message to Dan outlining the impact of each of the following bond characteristics on the bond's coupon rate. Include any pro or con aspects of each feature in your list.

To compute: The presence of a sinking fund

D

Summary Introduction

Adequate information: Larissa has chosen to increase the activities of East Coast Yachts as a result of Dan's EFN research. To finance the new building, she has requested Dan to help sell million in brand-new-year bonds with the help of an underwriter. Dan has started talking with Kendahl Shoemaker from Crowe & Mallard about the bond features East Coast Yachts should take into account and the expected coupon rate for the issue. Dan is aware of bond features, but he is unsure of the advantages and disadvantages of some of them. As a result, he is unsure of how each feature will affect the bond issue's coupon rate. Write a message to Dan outlining the impact of each of the following bond characteristics on the bond's coupon rate. Include any pro or con aspects of each feature in your list.

To compute: A call provision with specified call dates and call prices.

E

Summary Introduction

Adequate information: Larissa has chosen to increase the activities of East Coast Yachts as a result of Dan's EFN research. To finance the new building, she has requested Dan to help sell million in brand-new-year bonds with the help of an underwriter. Dan has started talking with Kendahl Shoemaker from Crowe & Mallard about the bond features East Coast Yachts should take into account and the expected coupon rate for the issue. Dan is aware of bond features, but he is unsure of the advantages and disadvantages of some of them. As a result, he is unsure of how each feature will affect the bond issue's coupon rate. Write a message to Dan outlining the impact of each of the following bond characteristics on the bond's coupon rate. Include any pro or con aspects of each feature in your list.

To compute: A deferred call accompanying the above call provision.

F

Summary Introduction

Adequate information: Larissa has chosen to increase the activities of East Coast Yachts as a result of Dan's EFN research. To finance the new building, she has requested Dan to help sell million in brand-new-year bonds with the help of an underwriter. Dan has started talking with Kendahl Shoemaker from Crowe & Mallard about the bond features East Coast Yachts should take into account and the expected coupon rate for the issue. Dan is aware of bond features, but he is unsure of the advantages and disadvantages of some of them. As a result, he is unsure of how each feature will affect the bond issue's coupon rate. Write a message to Dan outlining the impact of each of the following bond characteristics on the bond's coupon rate. Include any pro or con aspects of each feature in your list.

To compute: A make-whole call provision

G

Summary Introduction

Adequate information: Larissa has chosen to increase the activities of East Coast Yachts as a result of Dan's EFN research. To finance the new building, she has requested Dan to help sell million in brand-new-year bonds with the help of an underwriter. Dan has started talking with Kendahl Shoemaker from Crowe & Mallard about the bond features East Coast Yachts should take into account and the expected coupon rate for the issue. Dan is aware of bond features, but he is unsure of the advantages and disadvantages of some of them. As a result, he is unsure of how each feature will affect the bond issue's coupon rate. Write a message to Dan outlining the impact of each of the following bond characteristics on the bond's coupon rate. Include any pro or con aspects of each feature in your list.

To compute: Any positive covenants

H

Summary Introduction

Adequate information: Larissa has chosen to increase the activities of East Coast Yachts as a result of Dan's EFN research. To finance the new building, she has requested Dan to help sell million in brand-new-year bonds with the help of an underwriter. Dan has started talking with Kendahl Shoemaker from Crowe & Mallard about the bond features East Coast Yachts should take into account and the expected coupon rate for the issue. Dan is aware of bond features, but he is unsure of the advantages and disadvantages of some of them. As a result, he is unsure of how each feature will affect the bond issue's coupon rate. Write a message to Dan outlining the impact of each of the following bond characteristics on the bond's coupon rate. Include any pro or con aspects of each feature in your list.

To compute: Any negative covenants

I

Summary Introduction

Adequate information: Larissa has chosen to increase the activities of East Coast Yachts as a result of Dan's EFN research. To finance the new building, she has requested Dan to help sell million in brand-new-year bonds with the help of an underwriter. Dan has started talking with Kendahl Shoemaker from Crowe & Mallard about the bond features East Coast Yachts should take into account and the expected coupon rate for the issue. Dan is aware of bond features, but he is unsure of the advantages and disadvantages of some of them. As a result, he is unsure of how each feature will affect the bond issue's coupon rate. Write a message to Dan outlining the impact of each of the following bond characteristics on the bond's coupon rate. Include any pro or con aspects of each feature in your list.

To compute: A conversion feature

J

Summary Introduction

Adequate information: Larissa has chosen to increase the activities of East Coast Yachts as a result of Dan's EFN research. To finance the new building, she has requested Dan to help sell million in brand-new-year bonds with the help of an underwriter. Dan has started talking with Kendahl Shoemaker from Crowe & Mallard about the bond features East Coast Yachts should take into account and the expected coupon rate for the issue. Dan is aware of bond features, but he is unsure of the advantages and disadvantages of some of them. As a result, he is unsure of how each feature will affect the bond issue's coupon rate. Write a message to Dan outlining the impact of each of the following bond characteristics on the bond's coupon rate. Include any pro or con aspects of each feature in your list.

To compute: A floating rate coupon

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Chapter 8 Solutions

CNCT ACC CORPORATE FINANCE

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