Initially, bond ratings were paid for by the bond purchaser. Today bonding ratings are under an “issuer pays” model. Explain how the two forms are different.
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Initially, bond ratings were paid for by the bond purchaser. Today bonding ratings are under an “issuer pays” model. Explain how the two forms are different.
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- From Service Leader’s perspective, why are the bonds callable? What does that mean?Explain the effect Serial Bonds have on risk from both the perspective of the bond issuer and from the perspective of the bondholder.In U.S. GAAP, bond issue costs are considered ________. Group of answer choices a period cost a cost of borrowing that reduces the effective interest expense an initial cost that is expensed when the bonds are issued an element in determining the carrying value of the bonds outstanding
- A legal document that details the rights of bondholders and the issuer is called . If the legal document just described includes a sinking fund provision, is the bond considered to have more or less default risk, all else being equal? More default risk Less default risk You can distinguish the various types of bonds by their terms of contract, pledge of collateral, and so on. Identify the type of bond based on each description given in the table that follows: Description Type of Bond These bonds are backed by real estate holdings and equipment, and if a company goes bankrupt, the collateral can be sold off to compensate for the default. These bonds, more so than other collateralized securities, have prior claims over assets. These bonds are not backed by any physical collateral. They are backed by the reputation and creditworthiness of the issuing company. These bonds are considered the riskiest of all corporate bonds and thus…To provide credit rating in the bond market, Bonds are given rankings according to their investment quality, i.e., investment grade and non-investment grade. Which of the following is a measure of the highest investment grade bond? ABC Bbb AAA Ccc- None of the above.Discuss the functioning and merits of callable and puttable bonds from an investor’s perspective. Discuss how the price of a puttable bond will differ from the price of a similar, plain vanilla bond and the main determinants of this price difference. In which market environment does the issuance of a callable bond make more sense from a corporate issuer’s perspective?
- Each bond differs with respect to risk and expected return. Differentiate between treasury bonds, corporate bonds, municipal bonds and foreign bonds.a. Explain what a corporate bond isb. Outline the characteristics of the bond marketd. Explain the benefits of issuing bonds to raise financingWhat is the relationship between bond prices and interest rates? Describe how this link came to be developed in detail. How can we utilize this connection to determine the value of a bond?
- What are the major advantages of using issuing bonds?1. You are comparing the two bonds below. Please note differences and what impact each would have on how the bonds should trade relative to each other in the secondary market. Bond A: Home Depot Bond B: LowesWhat is a call provision? Why do companies often include call provisions on bond issues?
