=+your opinion, did GE Capital act unethically by selling $11 billion oflong-term debt without telling those investors that a few days later it would be filing documents to prepare for another $50 billion debt offering?

Source: Jennifer Ablan, “Gross Shakes the Bond Market; GE Calms It, a Bit,” Barron’s, March 25, 2002.

Fiestas Inc. has decided to expand its operations to owning and operating theme parks. The fol¬

lowing is an excerpt from a conversation between the chief executive officer, Juan Laurenzo, and the vice-president offinance, Christina Jose.

Juan: Christina, have you given any thought to how we’re going to finance the acquisition of Frightmare Corporation?

Christina: Well, the two basic options, as I see it, are to issue either preferred stock or bonds. The equity market is a little depressed right now. The rumor is that the Federal Reserve Banks going to increase the interest rates either this month or next.

Juan: Yes, I’ve heard the rumor. The problem is that we can’t wait around to see what’s going to happen. We’ll have to move on this next week ifwe want any chance to complete the acquisition of Frightmare.

Christina: Well, the bond market is strong right now. Maybe we should issue debt this time around.

(continued)

300 Chapter 8 Juan: That’s what I would have guessed as well. Frightmare’s financial statements look pretty good, except for the volatility ofits income and cash flows. But thats characteristic ofthe industry.