Griffin Warner KIN356 Problem Set Seven 1) Senior secured debt, junior secured debt, common stock, preferred stock, senior debenture, subordinated debenture 2) Serial payments are made because the future value of money decreases so in essence a loan being paid off later is actually a good deal because present capital is worth more. A sinking fund is a way for a company to rid oneself of debt usually when their debt is repaid or their loans are purchased by the government or other companies. 3) The bond rating affects the interest paid by a corporation on its bonds because it determines the credit worthiness of a corporation’s debt issues. A credit rating determines how likely a lender would be to see its money, and therefore the interest rate fluctuates depending on how satisfactory the rating is. 4) Corporate management is increasingly sensitive to large institutional investors because they are always seeking financial capital and in order to secure it they need to constantly be on their best behaviors in front of potential investors. 5) The rights of common stockholders is known as equity ownership, so they have a right
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This note was uploaded on 06/15/2011 for the course KIN 356 taught by Professor Warner during the Fall '09 term at University of Texas.