Explain the use of a sinking-fund provision. How can it reduce the investor’s risk? What are protective covenants? Why are they needed? Explain the use of call provisions on bonds. How can a call provision affect the price of a bond? Explain the use of bond collateral, and identify the common types of collateral for bonds. What are debentures? How do they differ from subordinated debentures? What is a bond indenture? What is the function of a trustee with respect to the bond indenture? What are the advantages and disadvantages to a firm that issues low- or zero-coupon bonds?
Explain the use of a sinking-fund provision. How can it reduce the investor’s risk? What are protective covenants? Why are they needed? Explain the use of call provisions on bonds. How can a call provision affect the price of a bond? Explain the use of bond collateral, and identify the common types of collateral for bonds. What are debentures? How do they differ from subordinated debentures? What is a bond indenture? What is the function of a trustee with respect to the bond indenture? What are the advantages and disadvantages to a firm that issues low- or zero-coupon bonds?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 2MC
Related questions
Question
- Explain the use of a sinking-fund provision. How can it reduce the investor’s risk?
- What are protective covenants? Why are they needed?
- Explain the use of call provisions on bonds. How can a call provision affect the price of a bond?
- Explain the use of bond collateral, and identify the common types of collateral for bonds.
- What are debentures? How do they differ from subordinated debentures?
-
What is a bond indenture? What is the function of a trustee with respect to the bond indenture?
- What are the advantages and disadvantages to a firm that issues low- or zero-coupon bonds?
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