1. Define preferred stock, describe some of its basic features, identify and briefly explain other types of preferred stock discussed in the chapter, and identify preferreds advantages and disadvantages.
2. Characterize the various types of leases, discuss the financial statement effects of off balance sheet financing, perform the analysis necessary to make lease versus borrow-and-purchase decisions, and identify and briefly explain a few of the factors affecting leasing decisions.
3. Discuss warrants and the way in which corporations utilize bonds with warrants as an alternative means of raising investment capital, describe how warrants are valued, calculate the component cost of bonds with warrants, and discuss the wealth effects and dilution due to warrants.
4. Explain how convertible securities work, define the terms conversion ratio and conversion price, explain how they are valued, calculate the component cost of convertibles, and explain how convertibles affect the issuing firms capital structure.
5. Identify differences between warrants and convertibles.