BUSI 320 Read & Interact Chapter 16 Assignment solutions complete answers

BUSI 320 Read & Interact Chapter 16 Assignment solutions complete answers 

 

Which of the following is a finance lease.

 

The three disadvantages of including debt in the capital structure are the obligations is fixed and must be paid, the ____ agreement may put restrictions on the firm, and debt can ____ (increase/depress) common stock values if utilized beyond a given point.

 

A company issuing bonds with a high rating can generally expect to      compare to a company with a low rating.

 

If market interest rates rise above the coupon rate, the bond’s market price will be       par value.

 

Which of the following are classified as outflows in a bond refunding decision?

 

Which of the following are classified as inflows in a bond refunding decision?

 

Which of the following are advantages of leasing an asset?

 

Which of the following are advantages to the issuer of zero-coupon bonds?

 

A bond with a par value of $1000 is trading at $1100 and pays a $100 coupon. Similar bonds are yielding 10%. The current yield of the bond is    %.

 

A capital lease occurs when all of the ________ and ________ of ownership are transferred to the lessee.

 

A debenture is a _____.

 

A long-term, non-cancelable lease is identical to purchasing an ___ with     capital.

 

The times-interest-earned ratio is _______.

 

Which of the following are methods of retiring bonds?

 

Which of the following is an example of secured debt? A delivery company pledges its truck to its bondholders.

 

A company with a low credit rating can generally expect to pay _________ in interest and receive _______ for its bonds.

 

A bond has a par value of $1000 is trading at $900, and pays a $90 coupon. Similar bonds are yielding 10%. The coupon rate of the bond is ___%?

 

Which of the following is true of floating rate bonds?

 

A refunding operation is when a company __________ back its bonds at prices ___________ than market and replaces them with bonds that have _________ coupon rates.

 

Which of the following are classified as outflows in a bound refunding decision?

 

Which of the following is true of operating leases?

 

The yield to maturity for an investor in a zero-coupon bond is____.

 

A mortgage agreement is a form of     debt, wherein____ property is pledged as security for the loan.

 

A subordinated debenture is    .

 

Debt with fewer protections afforded bondholders can be expected to have a ____ interest payment.

 

The date on which the final payment for a bond is due is called the     date.

 

Which of the following are benefits of having debt in the capital structure?

 

If a bond has a par value of $1000 and pays a 6% coupon, the current market value of the bond is ______ if similar bonds are yielding 5%.

 

The coupon rate is_____.

 

The three disadvantages of including debt in the capital structure are the obligations is ___ and must be paid, the ____ agreement may put restrictions on the firm, and debt can ____ common stock values.

 

Par value is the initial value of the bond, commonly known as the     value.

 

Which of the following are basic components of a bond agreement?

 

The yield to maturity of a bond is     .

 

 

 
 
 
The two factors that affect the denominator of the times interest earned ratio are the ____ of debt on the balance sheet and the ____ rate of their bonds.
 
 
 
If a bond is secured this means that specific____have been pledged to protect the ____in case the company_____.
 
 
 
A Eurobond is ____.
 
 
 
Which of the following is correct:
 
 
 
When inflation occurs debt is paid back with ____dollars, meaning that the coupon will remain___while the real value of the obligation____in size.
 
 
 
Which of the following would be considered a conversion feature of debt?
 
 
 
Which of the following would be considered a lease transaction?
 
 
 
Which of the following are considered by a rating agency when assigning a rating?
 
 
 
The return purchaser of a zero-coupon bond is the difference between the investor's___and the___value of the bond.
 
 
 
Which of the following are disadvantages of having debt in the capital structure?
 
 
 
The four advantages of having debt in the capital structure are the interest payments are tax ____, the financial obligation is clearly _____, inflation can lower the liability in real dollar terms, and the use of debt can reduce a company's cost of capital.
 
 
 
Which of the following are reasons that companies have increased their use of long-term debt for financing?
 
 
 
The initial value of the bond is also known as its____.
 
 
 
Which of the following is a capital lease?
 
 
 
bond with a sinking-fund provision ____.
 
 
 
The primary disadvantages to the investor of a zero-coupon is that the gradual ____in value is_____as ordinary income.
 
 
 
Identify variables that must be present in order for a company to initiate a refunding operation?
 
 
 
Under which conditions would a company refinance its debt?
 
 
 
The yield to maturity can also be thought of as a bond's ____.
 
 
 
 
 
 
 
 
 

 
 
 
A bond with a serial payment provision _____.
 
 
 
A lender is negotiating a mortgage and desires an after-acquired property clause. What can be expected to happen if the after-acquired property clause is not included in the final deal?
 
 
 
A subordinate debenture is___.
 
 
 
The ___value of the bond is paid on the ___ date
 
 
 
Bond retirement methods include the single lump-sum payment at maturity, serial ____, and by a ____ feature.
 
 
 
A company issuing bonds with high rating can generally expect to___compare to a company with a low rating.
 
 
 
When the economy is in recession the times-interest-earned ratio___.
 
 
 
A bond with a call provision allows a company to ___ a bond at a ____ to par in order to _____at a lower interest rate?
 
 
 
A sale-leaseback arrangement occurs when a company___an asset to receive a capital____, and then leases the asset from the ___ of the property.
 
 
 
If an investor is holding a junior mortgage, the investor will receive payment after all____obligations have been made.
 
 
 
The yield spread is ___ during recessions and ___ during normal economic times.
 
 
 
 
 
 
 

 

1.
A bond has a par value of $1,100, and pays an $80 coupon. Similar bonds are yielding 6%. The coupon rate of the bond is ______.
 
 
2.
A bond has a par value of $1000 is trading at $900, and pays a $90 coupon. Similar bonds are yielding 10%. The current yield of the bond is ___%?
 
 
4.
A bond with a sinking-fund provision ______
 
 
7.
The coupon rate is _______
 
 
8.
Debenture
 
 
9.
A ______ debenture holder is paid just after the senior debenture holders have been paid
 
 
10.
A Eurobond is
 
 
11.
The four advantages of having debt in the capital structure are: the interest payments are tax_________, the financial obligation is ___________, inflation can lower the liability in real dollar terms, and the use of debt can reduce a company/s cost of capital
 
 
15.
If a bond has a par value of $1000 and pays a 6% coupon, the current market value of the bond is ________ if similar bonds are yielding 8%
 
 
17.
A lender is negotiating a mortgage and desires an after-acquired property clause. What can be expected to happen if the after-acquired property clause is not included in the final deal
 
 
18.
The market value of a floating rate bond is often close to ______ value because the yield on the bond ________ with market yields
 
 
22.
The return to a purchaser of a zero-coupon bond is the difference between the investor's _____ and the ______ value of the bond
 
 
24.
T/F: A bond with a serial payment provision has a maximum of four different maturity dates
 
 
25.
T/F: A mortgage is considered secured debt because it is backed by real property.
 
 
26.
T/F: During an inflationary economy, debt is effectively more expensive to the issuer
 
 
27.
T/F: Operating lease usually calls for an annual expense deduction equal to the lease payments
 
 
28.
T/F: The yield spread between higher and lower rated corporate bonds varies with economic conditions
 
 
33.
The ______ value of the bond is paid on the _____ date
 
 
 
 
 
 
 
 
 
 
 

38.
What are the disadvantages of having debt in the capital structure
 
 
41.
What would be considered a conversion feature of debt
a company exchanges its bonds for equity
 
 
42.
What would be considered a lease transaction
 
 
47.
Which of the following is a capital lease?