chap020 - Chapter 20 LONG-TERM DEBT SLIDES 20.1 20.2 20.3...

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Chapter 20 LONG-TERM DEBT SLIDES CHAPTER WEB SITES Section Web Address End-of-chapter material www.mhhe.com/edumarketinsight CHAPTER ORGANIZATION 20.1 Long-Term Debt: A Review 20.2 The Public Issue of Bonds The Basic Terms A Note on Bond Price Quotes Security Protective Covenants The Sinking Fund The Call Provision 20.1 Key Concepts and Skills 20.2 Chapter Outline 20.3 Long-Term Debt: A Review 20.4 Features of a Cisco Systems Bond 20.5 The Public Issue of Bonds 20.6 Protective Covenants 20.7 Principal Repayment 20.8 The Sinking Fund 20.9 Bond Refunding 20.10 Callable Bonds versus Noncallable Bonds 20.11 Bond Ratings 20.12 Bond Ratings: Investment Grade 20.13 Bond Ratings: Below Investment Grade 20.14 Junk Bonds 20.15 Different Types of Bonds 20.16 Put Bonds 20.17 Convertible Bonds 20.18 Convertible Bond Prices 20.19 More on Convertibles 20.20 Direct Placement Compared to Public Issues 20.21 Long-Term Syndicated Bank Loans 20.22 Quick Quiz
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A-244 CHAPTER 20 20.3 Bond Refunding Should Firms Issue Callable Bonds? Calling Bonds: When Does It Make Sense? 20.4 Bond Ratings Junk Bonds 20.5 Some Different Types of Bonds Floating-Rate Bonds Deep-Discount Bonds Income Bonds Other Types of Bonds 20.6 Direct Placement Compared to Public Issues 20.7 Long-Term Syndicated Bank Loans ANNOTATED CHAPTER OUTLINE Slide 20.0 Chapter 20 Title Slide Slide 20.1 Key Concepts and Skills Slide 20.2 Chapter Outline 20.1. Long-Term Debt: A Review Slide 20.3 Long-Term Debt: A Review Debt securities can be short-term (maturities of one year or less) or long-term (maturities of more than one year). Slide 20.4 Features of a Cisco Systems Bond 20.2. The Public Issue of Bonds Slide 20.5 The Public Issue of Bonds .A The Basic Terms Bonds – long-term IOU’s, usually interest-only loans (interest is paid by the borrower every period with the principal repaid at the end of the loan). Coupons – the regular interest payments (if fixed amount – level coupon).
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CHAPTER 20 A-245 Face or par value – principal, amount repaid at the end of the loan Coupon rate – coupon quoted as a percent of face value Maturity – time until face value is paid, usually given in years Yield to maturity (YTM) – the required market rate or rate that makes the discounted cash flows from a bond equal to the bond’s market price. Indenture – written agreement between issuer and creditors detailing terms of borrowing. (Also deed of trust.) The indenture includes the following provisions: -Bond terms -The total face amount of bonds issued -A description of any property used as security -The repayment arrangements -Any call provisions -Any protective covenants Lecture Tip: Although the majority of corporate bonds have a $1,000 face value, there are an increasing number of “baby bonds” outstanding, i.e., bonds with face values less than $1,000. The use of the term “baby bond” goes back at least as far as 1970, when it was used in connection with AT&T’s announcement of the intent to sell bonds with low face values. It was also used in describing
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chap020 - Chapter 20 LONG-TERM DEBT SLIDES 20.1 20.2 20.3...

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