Mark Sexton and Todd story ,the owners of S & S Air, have decided to expand their operations. They instructed their newly hired financial analyst, Chris Guthrie, to enlist an underwriter to help sell $35 Million in new 10 yrs bonds to finanxce construction. Chris has entered into discussion with Renata harper ,an underwriter from the firm of Raines and Warren,about which bond features S & S Air should consider and what coupon rate the issue will likely have.

Although Chris ais aware of the bond features, he is uncertain about the cst and benefits of some features. So he is not sure hoew each feature would affect the coupon rate of the bond issue.

You are Renata's assistantand she has asked you to prepare a memo to Chris describing the effect of each of the following bond features on the coupon rate of the bond.

She would also like you to list any advantages or disadvantages of each feature.

1. The security of the bond-that is whether the bond has collateral
2. The seniority of the bond
3. The presence of the sinking funds.
4. Acall provision with specified call dates and call prices.
5. A deferred call accompanying the call provision.
6. A make-whole call provision.
7. Any positive covenants,also discuss several possible positive covenants S& S might consider
8. Any negative covenants. Also discuss several possible negative covenants S&S air might consider.
9. A conversion feature ( note that S&S Air is not a publicly traded company ).
10. A floating rate coupon.