Unformatted text preview: Professor and Class, For this week’s Ethics Lesson, we are asked to discuss the following scenario about GE Capital and whether they have acted ethically or professionally. “When corporations issue bonds, the buyers of those bonds (the investors), should try to determine the impact of the bond issuance on the expected earnings of the corporation” GE Capital, a division of General Electric, uses long term debt extensively. In early 2002, GE Capital issued $11 billion in long term debt to investors, and then within days announced plans to file legal documents to prepare for another $50 billion long term debt issue. As a result of this new $50 billion filing, the price of the initial $11 billion offering declined (due to higher risk of more debt). “This was the most recent and most egregious example of how bondholders are mistreated”, stated manager, Bill Gross. It was one of the largest bond issues ever by a US corporation. Bill Gross was bothered most by the fact that it was only 3 days between the $11 billion bond issue, and GE’s...
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This note was uploaded on 12/08/2009 for the course AC 116 AC 116 taught by Professor Unknown during the Spring '09 term at Kaplan University.
- Spring '09