Questions from Corporate Finance

Q: Digital Organics has 10 million outstanding shares trading at $25 per

Digital Organics has 10 million outstanding shares trading at $25 per share. It also has a large amount of debt outstanding, all coming due in one year. The debt pays interest at 8%. It has a par (fac...

Q: Look back at the first Backwoods Chemical example at the start of

Look back at the first Backwoods Chemical example at the start of Section 23-1. Suppose that the firm’s book balance sheet is
The debt has a one-year maturity and a promised interest payment of 9%....

Q: It was one of Morse’s most puzzling cases. That morning

It was one of Morse’s most puzzling cases. That morning Rupert Thorndike, the autocratic CEO of Thorndike Oil, was found dead in a pool of blood on his bedroom floor. He had been sh...

Q: Select the most appropriate term from within the parentheses: a

Select the most appropriate term from within the parentheses: a. (High-grade utility bonds/Low-grade industrial bonds) generally have only light sinking fund requirements. b. Collateral trust bonds ar...

Q: For each of the following sinking funds, state whether the fund

For each of the following sinking funds, state whether the fund increases or decreases the value of the bond at the time of issue (or whether it is impossible to say): a. An optional sinking fund oper...

Q: Use Table 24.1 (but not the text) to

Use Table 24.1 (but not the text) to answer the following questions: a. Who are the principal underwriters for the J.C. Penney bond issue? b. Who is the trustee for the issue? c. How many dollars does...

Q: Look at Table 24.1:
a

Look at Table 24.1:
a. Suppose the debenture was issued on September 1, 1992, at 99.489%. How much would you have to pay to buy one bond delivered on September 15? Don’t forget to include accrued i...

Q: Explain the three principal ways in which the terms of private placement

Explain the three principal ways in which the terms of private placement bonds commonly differ from those of public issues.

Q: True or false? a. Convertible bonds are usually senior

True or false? a. Convertible bonds are usually senior claims on the firm. b. The higher the conversion ratio, the more valuable the convertible. c. The higher the conversion price, the more valuable...

Q: “A call option is always riskier than the stock it is

“A call option is always riskier than the stock it is written on.” True or false? How does the risk of an option change when the stock price changes?