Exam 15: Debt Financing

Coupon: 0% Call Date: 1 July 2012 Call Price: 104.32% Maturity: 1 July 2019 A firm issues the convertible debt shown above. The price of stock in this company on 1 July 2012 is $28.20. What is the minimum conversion ratio that would make a bondholder prefer to convert rather than accept the call price?

Which of the following statements is FALSE?

In terms of public offerings of bonds, what is an indenture?

A company issues a callable (at par) ten-year, 6% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date. On release, it has a price of $104 per $100 of face value. What is the yield to call of this bond when it is released?

A company issues a callable (at par) ten-year, 6% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date. On release, it has a price of $104 per $100 of face value. What is the yield to worst of this bond when it is released?

Gepps Cross Industries issues debt with a maturity of 25 years. In the case of bankruptcy, holders of this debt may only claim those assets of the firm that are not already pledged as collateral on other debt. Which of the following best describes this type of corporate debt?

Which of the following best describes an international bond that is NOT denominated in the local currency of the country in which it is issued?

Clearview Corporation, a company that deals mainly with the financing and distribution of music, issues debt with a maturity of 15 years. In the case of bankruptcy, holders of this debt will have claim to the intellectual property of Clearview. Which of the following best describes this type of corporate debt?

Coupon: 0% Conversion Ratio: 285 shares per $10,000 principal amount Call Date: 1 July 2012 Maturity: 1 July 2019 A firm issues the convertible debt shown above. The price of stock in this company on 1 July 2012 is $36.00. What is the minimum call price that would make a bondholder prefer to accept the call rather than convert?

Which of the following statements about bonds that are both convertible and callable is NOT true?

Which of the following statements is FALSE?

When would it make sense for a firm to call a bond issue and refinance?

A covenant that restricts a company from making loans or otherwise providing credit is best viewed as a restriction on which of the following?

What kind of corporate debt must be secured by real property?

Which of the following statements is FALSE regarding a call provision?

What is yield to worst?

A company issues a callable (at par) 20-year, 5% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date. On release, it has a price of $102 per $100 of face value. What is the yield to call of this bond when it is released?

Which of the following would be most likely to have the lowest price?

Which of the following statements is FALSE?

What is secured debt?