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Issuer's Considerations
Cash Flows: Issuers may consider the period for which the funds are required and try to spread the borrowings in a way to minimize the costs. Generally, the requirements of funds will depend on the purpose for which the funds are raised.
Taxation: Issuers may have to assess the tax liability of the company and try to design the instrument in order to get the benefit of certain tax incentives for the company and to the investors. The attempt would be to minimize the tax liability of the issuer.
Leverage: Issuers may assess the debt to equity ratio of the company since excess of debt may burden the company with debt servicing. Further, in a falling interest rate scenario a debt contracted for a long-term will increase the cost of funds for the company.
Dilution of Control: Likewise, excess of equity will dilute the control over the company and this will be a disincentive especially if the promoters prefer the company to be closely held.
Transaction Costs: The instrument should have adequate liquidity so that investors costs while transacting are minimal.
Quantum of Funds: Issuers may target the investors based on the quantum of funds required and the time within which the funds are to be raised.
Maturity Plan: Depending upon the future requirement of funds and also on the availability of funds to repay the lenders, the repayment schedule of the instrument has to be designed.
Many practitioners feel that instead of using only on-the-run issues, all treasury coupon securities and bills are to be used for constructing the theoretical spo
Earning per share Earnings per share (EPS) are computed as profit attributable to equity divided by the number of shares in issue and ranking for dividends. EPS therefore repr
Six years ago . the singleton company sold a 20 year bond with a 14% annual coupon rate and a 9% call premium. today, singleton called the bonds. the bonds originally were sold at
Cash Flow Statement Ratios: This ratio, which is defined as a percentage, compares a company's operating cash flow to its total sales or revenues, which provide investors an i
Generally, an interest rate or an interest rate index is used as a reference rate for However, through financial engineering, issuers have been able to construct
Interest Rates The payment borrowers make for the use of the funds that they borrow and the payment that lenders demand for the use of the funds they lend (termed interest ) w
1. Your welfare depends on how much time you travel T and how much time you play P and is the product of the two, i.e., W = T * P (a) The total amount of time you have is 10 ho
Government intervention The government might look for intervene in the take-over bid because of fears that the market share of the combined group would constitute a monopoly wh
how can covered bond affect other secutites price
Identify and describe three types of start ups firms. Give an example of one you have dealt with. What is a business plan, what are its major components, and why is it important
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