Vocabulary check: Define the following terms: Indenture or trust deed, subordinated bond, call provision, sinking fund, foreign bond, negative pledge clause. (pages 670-678 of the book)
Explain the difference between a senior bond a secured bond. (page 673 of the book)
What is the difference between a bearer bond and a registered bond? (pages 671-672 of the book)
Does the issue of additional junior debt harm senior bondholders? Would your answer be different if the junior debt matured before the senior debt? Explain. (page 678 of the book)
Explain carefully why lenders often place limitations on the following actions:
Sale of the company's assets.
Payment of dividends to shareholders.
Issue of additional senior debt. (pages 672 and 678 of the book)
Does a callable bond sell at a higher or lower price than an equivalent non-callable bond? (pages 676-677 of the book)
Explain the basic rule for deciding when a company should call its bonds. (page 676 of the book)
Does privately placed debt tend to have more or less restrictions on the borrower? Why? (page 687 of the book)
Explain the terms "conversion ratio" and "conversion price." (page 680 of the book)
"Convertibles are less costly than straight debt." True or false? Explain why or why not. (pages 682-683 of the book)
List the differences between a convertible bond and a package of a bond and warrants. (pages 685-686 of the book)
What are the common features of project finance? (page 689 of the book)
