1. Which of the following is true of private placements of securities?

1. They have more restrictive covenants than public placements
2. Investors often must be qualified institutional buyers (QIBs)
3. Issuance costs are usually higher than for similar public debt
4. They must be registered with the Securities and Exchange Commission (SEC)

1. All of the following are true of bond ratings EXCEPT

1. a company's bond ratings have a direct impact on the company's cost of capital.
2. analysts use a precise mathematical formula to determine a bond's rating.
3. rating agencies may downgrade an issue based on changes in the general economic environment.
4. government entities with downgraded bonds have a more difficult time raising additional capital in the market.

1. All of the following are debt contract provisions EXCEPT

1. representations and warranties.
2. events of default.
3. covenants.
4. parent corporation comfort letters.