Call provisions, Financial Management

Assignment Help:

The issuer's right to call back the issue before the maturity date is referred to as a "call provision". In case of asset-backed securities, the trustee is granted the optional clean-up call provision. There are variants of such provisions.

Percentage of collateral call: In this case, bonds that are outstanding can be called at par value if the value of the outstanding collateral goes below a prespecified percentage of the original collateral's value.

Percentage of bonds clean-up call provision: In this type, bonds are called at par value when the percentage of the amount of outstanding bonds relative to the original amount of bonds issued exceeds a particular level.

Latter of percent or date call: The bonds outstanding are called in either of the two situations: (i) the value of the outstanding collateral reaches a predetermined level before the specified call date or (ii) the call date is reached but the value of the outstanding collateral still remains above the predetermined level.

Auction call: Here, call option will be exercised if, on a particular date, the value of the outstanding collateral is sold in the auction at a price greater than its par value. The excess amount received on the auctioned collateral is retained by the trustee and then subsequently paid to the issuer through the residual.

Insurer call: This call provision permits the issuer to call the bonds when the cumulative loss on the collateral reaches a particular level.


Related Discussions:- Call provisions

What is the function of dividend policy decision, Q. What is the function o...

Q. What is the function of Dividend policy decision? Dividend policy decision: the third major decision of the financial management of the decision related to the dividend poli

Financial mangement enviroment, 1. role financial intermediaries 2. nature ...

1. role financial intermediaries 2. nature and role of money markets

What is accelerated depreciation, Q. What is Accelerated Depreciation? ...

Q. What is Accelerated Depreciation? Accelerated Depreciation - Method which records greater DEPRECIATION than STRAIGHT-LINE DEPRECIATION in the early years and less depreciati

What is cost of capital, What is Cost of Capital Cost of Capital is the...

What is Cost of Capital Cost of Capital is the rate which should be earned in order to satisfy required rate of return of the firm's investors. It may also be defined as the ra

Financial management, Financial Management: Financial management is, in...

Financial Management: Financial management is, in its most basic interpretation, the management of costs against revenue. Other management initiatives, such as marketing, are d

Letter of credit (loc), Letter of Credit (LOC) A popular bank instrumen...

Letter of Credit (LOC) A popular bank instrument begins that a bank has granted the holder an amount of credit equal to the face amount of the L/C. A bank guarantees payment of

Minimum bonus and maximum bonus, Question 1 Sections 42 to 50 of the Act d...

Question 1 Sections 42 to 50 of the Act deal with provisions pertaining to welfare of workers. State a few welfare measures that you would suggest in factories. List the welfare m

Asset Securitization Structures (Excel help), #questAs an assistant vice pr...

#questAs an assistant vice president at a regional bank, your boss has tasked you to acquire $100 million of residential mortgages to be securitized in a pass-through MBS. There mu

Highest earnings-per-share, McGovern Company is comparing two disimilar cap...

McGovern Company is comparing two disimilar capital structures - an all-equity plan (Plan I) and a levered plan (Plan II).  Under Plan I, the Company would have 700,000 shares of s

Working capital financing, Do you guys provide Working Capital Financing as...

Do you guys provide Working Capital Financing assignment help? I need writing a report on Working Capital Financing and it is about 2000 words. Let me know. I need to buy your solu

Write Your Message!

Captcha
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