| | |Session 1 CML Group, Inc. (A) and (B); the (C) for class distribution. | | |2 Hutchison-Whampoa LTD - Yankee Bond Offering | | |3 Chase's Strategy for Syndicating the Hong Kong Disneyland Loan (A) | |
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Sample Level I Multiple Choice Questions 1. Sammy Sneadle, CFA, is the founder and portfolio manager of the Everglades Fund. In its first year the fund generated a return of 30 percent. Building on the fund’s performance, Sneadle created new marketing materials that showed the fund’s gross 1year return as well as the 3 and 5-year returns which he calculated by using back-tested performance information. As the marketing material is used only for presentations to institutional clients, Sneadle does
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1. Agency problems – why they arise, ways to reduce them (board of directors for ex.) • Corporations are owned by shareholders that want managers to maximize their wealth. • Agency problems arise due to the separation of ownership and management * Managers may have conflicts of interest with shareholders (maybe they want to maximize their own wealth rather than the shareholders wealth) – This is called an Agency Problem because the managers are acting as agents for the shareholders.
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FI 602 Case 6 Stone Container Corp Case Analysis Write-up Anonymous I. Overview J.H. Stone & Sons, a cardboard container and paper products manufacturer was founded by Joseph Stone in 1926 and after World War II reincorporated as Stone Container Corporation. Early on in its conception Stone was able to grow significantly by way of acquisition. The company had a policy of paying for its acquisitions either entirely in cash or borrowing funds with early repayment. Continuing to
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sells for $33, and its eight percent convertible debentures (issued at par, or $1,000) sell for $850. Each debenture can be converted into 25 shares of common stock at any time before 2019. What is the conversion value of the bond? (a) $707.33 (b) $744.56 (c) $783.75 (d) $825.00 (e) $866.25 | | | Student Answer: | | Answer (d) Coversion value=33x25=$825 | | Instructor Explanation: | D is correct. Instructor Explanation: Convertible Bonds (from Chapter 19 - Section 3, pp. 770
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TO BRIEF EXERCISES BRIEF EXERCISE 16-1 Cash ............................................................................. Discount on Bonds Payable ....................................... Bonds Payable ..................................................... BRIEF EXERCISE 16-2 Bonds Payable ........................................................... Discount on Bonds Payable .............................. Common Stock (2,000 X 50 X $10)..................... Paid-in Capital in Excess of Par— Common Stock
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and Information about Bonds Here is some terminology to remember: Bond: Long term debt instruments issued by corporations or governments Face Value (or par value or maturity value): The promised repayment at the end of the loan Coupon: The regular interest payments promised by the bond issuer Coupon Rate: Annual coupon payment divided by the face value Time to maturity: Number of years remaining to the face value payment (notice that ‘time to maturity’ for a bond decreases as time passes
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Chap 20 - Inflation also has an impact on divident policy. -firm needs more sources of funds to finance the replacement of worn-out assets. -replacement is not same as expansion of firm's operations. -inflation means that the firm will have ti spend more to maintain its current operations. -source of funds : retention of earnigs. - no unique divident policy that all firms follow. - reasons : saving brokerage commission - prefer cash to capital gains. - other reasons: deferring capital
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debentures/convertible debentures. To finance their forecasts, MCI will begin by selling $481 million in common stock in 1984 the same way it did in the past. The share price is currently $47 per share and MCI needs to capitalize on the high value while it can. From 1985 to 1989, MCI will sell convertible debentures. A Convertible debenture is a type of loan issued by a company that can be converted into stock by the holder and, under certain circumstances, the issuer of the bond. The debentures
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Secured And Unsecured Bonds Introduction Bonds may be secured or unsecured. To be secured is to be backed by collateral--the money or physical assets that a bond issuer must give to investors if the bond defaults. Securing ensures that capital will be available to pay the principal on a bond. Corporate bonds and municipal bonds may be secured or unsecured. Federal government bonds, however, are unsecured. You will learn first about some major types of secured bonds. After this, we will introduce
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