Mini-case Financing S & S Air’s Expansion Plans with a Bond Issue, economics homework help

Anonymous
timer Asked: Jul 31st, 2016
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Question description

Hello! Please assist with the below:

  1. Using a Word document, complete the requirements of the Mini-case “Financing S & S Air’s Expansion Plans with a Bond Issue” on page 238 in the textbook in the form of a memo, as explained in the case.
    1. For each of the ten bond features listed, briefly describe the likely impact of each of the features on the coupon rate demanded by potential bond investors when this new bond is issued.  Will it cause the necessary coupon rate to be higher or lower?
    2. In addition, for each of the ten bond features listed, briefly describe the advantages or disadvantages, from the company’s perspective, of implementing that feature with the newly issued bond.

Tutor Answer

ProTeacher
School: New York University

 
 
 
 
                      To : Chris 
 
                      From : Your Name 
 
                      Date : 3/8/2016 
 
 
                       Re : Describing the effect of each of the following bond features on 
the coupon rate of the bond. 
 
 
 
 
1.   ​The security of the bond; that is, whether or not the bond has collateral. 
 
 
The coupon rate will be lower when bond has collateral .Bondholders have an order on 
collateral .Because collateral provide savings to bondholders which can give them lower risk 
.The negative side of collateral is that company have not ability to sell that savings used as 
collateral and they have in general to leave the saving good active regulation.  
  
 
 
      2.     ​The seniority of the bond. 
 
 
 The coupon rate is lower when the bond is more senior .As senior bonds obtain entire pay in 
bankruptcy transfers subjec...

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