Question

1.Distinguish between public and private funding of debt. (Be specific.)

Public funding of debt is?

Private funding of debt is?

3.Restrictions placed on a borrowing company by lenders are known as: (Do not abbreviate.)

4. Are corporate bonds (or car loans, or some other type of financing arrangement) most commonly structured as (1) periodic payment debt, as (2) lump-sum payment debt, or as (3) combined periodic payment and lump-sum payment debt?

15. What are callable bonds?

17. Consider accounting for leases under the new standards. Name the two types of leases. (Do not abbreviate.)

18. Consider the preceding question. Which of the two types of leases previously did not hit the balance sheet and now does?

Answer 1

3. Restrictions placed on a borrowing company by lenders are called Covenants. They may be general covenants (procedural and discipline,etc) or debt covenants ( related to financial ratios and compliance etc)

4. Corporate bonds (or car loans, or some other type of financing arrangement) most commonly structured as periodic payment debt.

15. Meaning of Callable Bonds:

• A callable bond is a debt security that can be redeemed early by the issuer before its maturity at the issuer's discretion.
• A callable bond allows companies to pay off their debt early and benefit from favorable interest rate drops.
• A callable bond benefits the issuer, and so investors of these bonds are compensated with a more attractive interest rate than on otherwise similar non-callable bonds

17. The two types of Leases are Operating Lease and Finance lease