Question: 8. Paul the CFO forecasts that market yields will decrease due to Federal Reserve policy. He expects bond prices to increase so the company will

8. Paul the CFO forecasts that market yields will decrease due to Federal Reserve policy. He expects bond prices to increase so the company will not have to issue as many bonds to raise sufficient funding. What is your opinion of the CFO's views? Explain your answer. 9. Explain the following bond terms: senior subordinated, sinking fund, convertible, junk, floating rate. Would each of these increase or decrease the yield? Why? 10. The investment bankers tell a company that bond investors want the following covenants due to the current economic situation. 1. The company cannot merge with another company. 2. The company must maintain working capital above a certain limit. 3. The company cannot issue additional long term debt. 4. The company must limit dividends according to a formula. As the CFO of the company would you agree to these terms? Why or why not

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