Question
Identify whether each of the following factors will cause the required return on a debt security to be higher or lower. Briefly explain your answer.
Identify whether each of the following factors will cause the required return on a debt security to be higher or lower. Briefly explain your answer. (Each part is independent).
A) A subordinated bond that is convertible, relative to a non-convertible (more senior) bond issued by the same borrower.
B) 5 years to maturity (relative to a 20 year bond issued by the same borrower)
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Fundamentals of corporate finance
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
2nd Edition
978-0470933268, 470933267, 470876441, 978-0470876442
