Question: What factors might influence the choice between a bond issue
What factors might influence the choice between a bond issue with a sinking fund requirement and a serial bond issue?
Answer to relevant QuestionsWhat factors, other than the current interest rate at which new debt could be sold, should a manager consider when deciding to refund a bond issue? Suppose that a specialty retail firm takes out a term loan from a bank. Which do you think the bank would prefer to receive as collateral, a claim on the firm’s inventory or its receivables? Comment on the following statement: A key benefit of leasing is that it allows for the effective depreciation of land. Managers of slow- growing, but profitable, firms (i. e., tobacco companies) should pay out these high earnings as dividends. What can they choose to do instead? How do average dividend payout ratios for companies headquartered in English common- law countries compare with those of companies head-quartered in civil law countries? What explains this difference?
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