2 and 5

refunding 513 DISCUSSION QUESTIONS 1. Corporate debt has been expanding very dramatically in the last three decades. What has been the impact on interest coverage, particularly since 1977? (LO16-1) What are some specific features of bond agreements? (LO16-1) What is the difference between a bond agreement and a bond indenture? (LO16-1) Discuss the relationship between the coupon rate (original interest rate at time of issue) on a bond and its security provisions. (LO16-1) Take the following list of securities and arrange them in order of their priority of claims: (LO16-1) 2. 3. 4. 5. Senior debenture Senior secured debt Junior secured debt Preferred stock Subordinated ebenture Common stock What method of "bond repayment" reduces debt and increases the amount of common stock outstanding? (LO16-3) What is the purpose of serial repayments and sinking funds? (LO16-1, Under what circumstances would a call on a bond be exercised by a corpora tion? What is the purpose of a deferred call? (LO16-3) Discuss the relationship between bond prices and interest rates. What impact do 6. 7. 8. 9