Notes Ch 14

Notes Ch 14 - Jorge Rossello Busi 100 Chapter 14 Notes I Debt Financing a Financial Leverage A companys ability to earn more on borrowed money than

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Jorge Rossello Busi 100 Chapter 14 Notes I. Debt Financing a. Financial Leverage: A company’s ability to earn more on borrowed money than the associated interest cost on those funds; often viewed as a wise business strategy although risks (possible bankruptcy) are higher. II. The Issuance of Notes and Bonds a. Legal Terms in Contract Known as a Bond i. Face/Maturity Value: Amount of a note or bond to be repaid at the end of the contract; it serves as the basis for computing interest payments. ii. Note: A written contract to convey money as a loan at a specified interest rate and repayment schedule between two parties. iii. Bond: A written contract created by a debtor that is sold (often to members of the general public) to raise money. iv. Term Notes/Bonds: A type of debt instrument where interest is paid at regular time intervals with the entire maturity value due at the end of the contract period. v.
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This note was uploaded on 04/26/2011 for the course BUSI 100 taught by Professor Unknown during the Spring '07 term at UNC.

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Notes Ch 14 - Jorge Rossello Busi 100 Chapter 14 Notes I Debt Financing a Financial Leverage A companys ability to earn more on borrowed money than

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