Question: 1.Identify the two capital structure issues that financial managers must address and explain The effects and significance of these issues. 2.Define what is meant by

1.Identify the two capital structure issues that financial managers must address and explain

The effects and significance of these issues.

2.Define what is meant by interest rate risk. Assume you are the manager of a $100 million portfolio of corporate bonds and you believe interest rates will fall. What adjustments should you make to your portfolio based on your beliefs?

3.Explain liquidity, default risk, and interest rate risk premiums.

4.One of the bond rating agencies ran into controversy when it began rating bonds of some companies without their approval. Many of the companies whose bonds were rated in this manner were upset by this. Why do you think a company would be unhappy to receive a "free" bond rating?

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