How cost feature would affect the coupon rate

Assignment Help Corporate Finance
Reference no: EM131262913

QUESTION 1

Name two (2) leading bond-rating agencies in Malaysia and list down the credit rating used by these 2 agencies on the overall capacity of an entity to meets its financial obligation (please refer page 233 for example).

QUESTION 2

Answer all question in Minicase page 260 (Financing S&S Air's Expansion Plans with a Bond Issue).

Mark Sexton and Todd Story, the owner of S&S air, have decided to expand their operations. They instructed their newly hired financial analyst, Chris Guthrie, to enlist an underwriter to help sell $35 million in new 10-year bond to finance construction. Chris have entered into discussion with Kim McKenzie, an underwriter from the firm of Raines and Warren, about which bond features S&S Air should consider and what coupon rate the issue will likely have.

Although Chris is aware of the bong features, he is uncertain about the cosst and benefits of some features, so he isn't sure how cost feature would affect the coupon rate of the bond issue. You are Kim's assistant, and she asked you to prepare a memo to Chris describing the effect of each of the following bond features on the coupon rate of the bon. She would also like you list advantage and disadvantages of each feature:

QUESTIONS:

1. The security of the bond-that is, whether the bond is collateral.

2. The security of the bond.

3. The presence of a sinking fund.

4. A call provision with specified call dates and call prices.

5. A deferred call accompanying the call provision.

6. A make-whole call provision.

7. Any positive covenants. Also discuss several possible positive covenants S&S Air might consider.

8. Any negative covenants. Also discuss several possible negative covenants S&S Air might consider.

9. A conversion feature (note that S&S Air is a publicly traded company).

10. A floating-rate coupon.

Reference no: EM131262913

Questions Cloud

Manager role in implementing the continuity plans : Perform research on your local state's continuity plan. Based on you research, briefly describe the emergency manager's role in implementing the continuity plans. What challenges might they face in implementing the continuity plans? Do these plans..
Can a coach delegate accountability to a player : Can a coach delegate accountability to a player? - What is the difference between a general staff person and a specialist staff person?
What is job design and why is it necessary : What is the difference between product and customer departmentalization? -  What is job design and why is it necessary?
Discuss the economic impact of the chronic disease : Identify the factors that could have caused or lead to the particular disease or condition (Pathogenesis). Describe body system changes as a result of the disease process. Discuss the economic impact of the chronic disease.
How cost feature would affect the coupon rate : Name two leading bond-rating agencies in Malaysia and list down the credit rating used by these 2 agencies on the overall capacity of an entity to meets its financial obligation (please refer page 233 for example).
Determine the impact of the companys mission and vision : Determine the impact of the company's mission, vision, and primary stakeholders on its overall success. Analyze the five forces of competition to determine how they impact the company.
Minimize negative office politics : Next, identify the article and explain the gist of it and also share some of your thoughts on the matter. Do you agree with the expert? Why? Furthermore, as a leader, what can be done to foster positive office politics and minimize negative offic..
Describing the high and moderate hazards : Conduct a hazard analysis of your community. Based on your analysis, write a 5-10 page paper describing the high and moderate hazards you identified. Follow these steps:
Describe the epidemiology of infection-occurrence : Describe the epidemiology of infection-occurrence, modes of transmission, common vehicles, and incubation period. Use the modes of transmission and incubation period for a disease to focus the search for the source of the outbreak or event describ..

Reviews

len1262913

11/2/2016 3:34:00 AM

Although Chris is aware of the bong features, he is uncertain about the cosst and benefits of some features, so he isn't sure how cost feature would affect the coupon rate of the bond issue. You are Kim's assistant, and she asked you to prepare a memo to Chris describing the effect of each of the following bond features on the coupon rate of the bon. She would also like you list advantage and disadvantages of each feature: QUESTIONS: 1. The security of the bond-that is, whether the bond is collateral. 2. The security of the bond. 3. The presence of a sinking fund. 4. A call provision with specified call dates and call prices. 5. A deferred call accompanying the call provision. 6. A make-whole call provision. 7. Any positive covenants. Also discuss several possible positive covenants S&S Air might consider. 8. Any negative covenants. Also discuss several possible negative covenants S&S Air might consider. 9. A conversion feature (note that S&S Air is a publicly traded company). 10. A floating-rate coupon.

len1262913

11/2/2016 3:33:46 AM

Mark Sexton and Todd Story, the owner of S&S air, have decided to expand their operations. They instructed their newly hired financial analyst, Chris Guthrie, to enlist an underwriter to help sell $35 million in new 10-year bond to finance construction. Chris have entered into discussion with Kim McKenzie, an underwriter from the firm of Raines and Warren, about which bond features S&S Air should consider and what coupon rate the issue will likely have.

Write a Review

Corporate Finance Questions & Answers

  Impact of the global economic crisis on business environment

This paper reviews the article of ‘the impact of the global economic crisis on the business environment' that is written by Roman & Sargu (2011).

  Explain the short and the long-run effects on real output

Explain the short and the long-run effects on real output, price, and unemployment

  Examine the requirements for measuring assets

Examine the needs for measuring assets at fair value in accounting standards

  Financial analysis report driven by rigorous ratio analysis

Financial analysis report driven by rigorous ratio analysis

  Calculate the value of the merged company

Calculate the value of the merged company, the gains (losses) to each group of shareholders, NPV of the deal under different payment methods. Synergy remains the same regardless of payment method.

  Stock market project

Select five companies for the purpose of tracking the stock market, preparing research on the companies, and preparing company reports.

  Write paper on financial analysis and business analysis

Write paper on financial analysis and business analysis

  Intermediate finance

Presence of the taxes increase or decrease the value of the firm

  Average price-earnings ratio

What is the value per share of the company's stock

  Determine the financial consequences

Show by calculation the net present value for the three alternatives (no education, network design certification, mba). Also, according to NPV suggest which alternative you advise your friend to choose

  Prepare a spread sheet model

Prepare a spread sheet model for the client that determines NPV/IRR with and without tax.

  Principles and tools for financial decision-making

Principles and tools for financial decision-making. Analyse the concept of corporate capital structure and compute cost of capital.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd