product. First let us understand what structured products are:- Structured products are designed to facilitate highly customized risk-return objectives. This is accomplished by taking a traditional security, such as a conventional investment grade bond, and replacing the usual payment features (e.g. periodic coupons and final principal) with non-traditional payoffs derived not from the issuer's own cash flow, but from the performance of one or more underlying assets. These product grew vary rapidly
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business. Companies use bonds to raise money for a long-term, large scale capital project. Accounting for a bond issuance is based on the length of time before the bond matures, the interest rate on the bond and whether it is sold at a premium or a discount. There are many types of bonds: secured and unsecured, term, serial and callable bonds as well as convertible, commodity-backed, deep-discount bonds, registered and bearer bonds as well as income and revenue bonds. Income bonds are accounted for
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SCHAUM’S OUTLINE OF THEORY AND PROBLEMS OF INTERMEDIATE ACCOUNTING II Second Edition BARUCH ENGLARD, M.S., M.B.A., CPA Associate Professor of Accounting The College of Staten Island The City University of New York SCHAUM’S OUTLINE SERIES New York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San Juan Seoul Singapore Sydney Toronto Copyright © 2007, 1992 by The McGraw-Hill Companies, Inc. All rights reserved. Manufactured in the United States of America
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with a cheap price. C) Total dividend is much larger than purchase price. In all, it is a super good investment. (3) About early investment in GEICO: (4) Convertible preferred stocks: A) Interest rates are very high (compare to the yield of the 30 year U.S. Treasury bond: 6.86%): about 9% on average. B) Most convertible preferred stocks’ market values are larger than par values. In all, they are very good investments. 3、 (3) Estimated method Discounted free flows of cash
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Bond Market INTRODUCTION Presently, as there is a robust growth of industrial activity in our economy, the need for investment has grown significantly and has resulted in a strong credit growth Some disintermediation is expected to take place as the most creditworthy borrower seeks the lowest borrowing costs. This development has re-emphasized the fact that bond financing has to supplement the traditional bank financing to take care of the growing credit needs of the economy. The Indian debt
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Restructuring Restructuring Debt 2 The three common long term debt options are bonds, notes, and capital leases. These three financing options provide companies with needed resources when looking to finance business opportunities or restructure debt, the company must decide which options if not all are right for their business and restructuring of debt. Bonds, Notes, and Capital Leases Bonds are certificates issued to companies who promise to pay back borrowed money with a fixed
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1Refer of bond; sovereign bond T 2Late of rating agencies, price increased already happened. T 3Plain vanilla bond, positive conv, isolate issue. T 4Interest rate components, real rate and default. F 5Coverage ratio numerator with EBIT not EBITDA. T 6Holding bond, generate return. Three components. T (At settlement delivers the bond and receives the futures price Return = coupon + reinvestment income + future’s price) 7Callable bond pay lower yield. F 8PIK bond avoided by most investors. T 9Duration
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by Allen Michel and Israel Shaked RJR Nabisco: A Case Study of a Complox Lovoragod Buyout Several features of RJR Nabisco made it a particularly attractive LBO candidate. Its operations exhibited moderate and consistent growth, required little capital investment and carried low debt levels. Its problems—a declining return on assets and falling inventory turnover—appeared fixable. And it offered significant break-up value. Valuing RJR's equity at the time of the LBO requires detailed knowledge
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average number of shares outstanding. Diluted earnings are earnings per share are composed of common stock, preferred stock, unexercised stock options unexercised warrants and some convertible debt” (Intermediate Accounting, 12th ed., pg. 793). Diluted earnings per share calculated by subtracting the impact of convertibles and
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financed with equity is: $3,000,000 x 85% = $2,550,000. Since the firm has $3,500,000 of net income, $950,000 = $3,500,000 - $2,550,000 will be left for dividends. 2. Question : (TCO F) The following data applies to Saunders Corporation's convertible bonds: Maturity: 10 Stock price: $30.00 Par value: $1,000.00 Conversion price: $35.00 Annual coupon: 5.00% Straight-debt yield: 8.00% What is the bond's conversion value? (a) $698.15 (b) $734.89 (c) $773.57 (d) $814.29 (e) $857.14
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