Solution-Identify four features of the issues that might

Identify four features of the issues that might account debt

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Reference no: EM131444384

Problem: Assume that two firms issue bonds with the following characteristics. Both bonds are issued at par.

ABC Bonds XYZ Bonds
Issue size $1.2 billion 1150 million
Maturity 10 years* 20 years
Coupon 9% 10%
Collateral First mortgage General debenture
Callable Not callable In 10 years
Call price None 110
Sinking fund None Starting in 5 years

*Bond is extendible at the discretion of the borcP-olde for an additional 10 years.

Ignoring credit quality, identify four features of these issues that might account for the lower coupon on the ABC debt. Explain.

Reference no: EM131444384

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Identify four features of the issues that might account debt

Reference no: EM131444384

Reference no: EM131444384

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