Exam 24: The Many Different Kinds of Debt

A bond-warrant package has different effects on the firm's cash flow and capital structure than a convertible bond.

The recovery rate on defaulting debt is the highest for the following type of debt:

Which of the following bonds is typically not secured?

A convertible bond issue can be thought of as the:

In general,which of the following statements is (are)true: I.Bonds issued in the United States are registered. II.Bonds issued in the United States are bearer bonds. III.Eurobonds are normally issued in a major currency,e.g.,$US,euro,or yen. IV.Eurobonds are normally issued in the local currency.

Firms often bundle up a group of assets and then sell the cash flows from these assets in the form of securities.They are called:

The largest market for foreign bonds is:

The difference between the price of callable and noncallable bonds is greatest when bond prices are lowest.

Discuss the differences between publicly issued bonds and private placements.

The following are secured bonds except:

The term bearer bond refers to bonds that bear little interest via coupon payments.

Briefly explain the term conversion ratio.

The call policy that maximizes shareholder wealth is to call a bond issue when:

A "samurai bond" is a bond:

The term Yankee bond refers to any bond sold in the United States.

If a corporate security can be exchange for a fixed number of shares of stock,the security is said to be:

Loan guarantees are valuable methods for propping up the value of debt without up-front cash.

The holder of a $1,000 face value bond has the right to exchange the bond any time before maturity for shares of stock priced at $50 per share.The $50 is called the:

Project finance is generally provided by:

The following are some of the complications associated with call provisions of bonds: I.The firm may be prevented from calling a bond because of a nonrefunding clause from issuing new debt. II.The call premium is a tax-deductible expense for the firm but is taxed as capital gains to bondholders. III.There may be other tax consequences to both the firm and the bondholders from replacing a low-coupon bond with a higher-coupon bond. IV.There are costs and delays associated with calling and reissuing debt.