Chap10wildtextbook

N gives the lender the right to be paid out of the

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n Gives the lender the right to be paid out of the cash proceeds from the sale of the borrower’s assets specifically identified in the mortgage contract. Mortgage Notes and Bonds 10-6
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Bonds do not affect stockholder control. Interest on bonds is tax deductible. Bonds can increase return on equity. Advantages of Bonds 10-7
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Bonds require payment of both periodic interest and par value at maturity. Bonds can decrease return on equity when the company pays more in interest than it earns on the borrowed funds. Disadvantages of Bonds 10-8
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. . .an investment firm called an underwriter. The underwriter sells the bonds to. . . A trustee monitors the bond issue. A company sells the bonds to. . . . . . investors Bond Issuing Procedures 10-9
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Bond Issue Date Bond Interest Payments Bond Interest Payments Corporation Investors Interest Payment = Bond Par Value × Stated Interest Rate Basics of Bonds 10-10
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Secured and Unsecured Term and Serial Registered and Bearer Convertible and Callable Types of Bonds 10-11
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Debt-to- equity ratio Total liabilities Total equity = This ratio helps investors determine the risk of investing in a company by dividing its total liabilities by total equity. Debt-to-Equity Ratio 10-12
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