金融学原理(英文)二单元课后答案.docVIP

CHAPTER 2 ANSWERS 2-1 a. 0 Bonds and term loans are equivalent debt instruments and should have about the same interest rate. b. + Debentures are riskier than mortgage bonds and, hence, would require a higher interest rate. c. - This would allow bondholders to reap the benefits of a stock price increase, so they would accept a lower interest rate. d. (1) + Because the debentures will be subordinated to its bank debt, the debentures will have a higher interest rate. (2) - Because the debentures will be subordinated to the bank debt, the bank debt will have a lower interest rate. (3) 0 The net effect of (1) and (2) is indeterminant. e. + Because income bonds are riskier, they would carry a higher rate of interest. f. (1) - The more of the property that is mortgaged the weaker the claim of the debenture holders. Thus, going from $75 million to $50 million of first mortgage debt will strengthen the debentures and lower their interest rate. (2) - The property will have a smaller mortgage; hence, each individual first mortgage bond will be better secured, less risky, and have a lower interest rate. (3) 0 Debentures will cost less, as will mortgage bonds, but the average cost probably will be about the sameat least, it is not obvious that the cost will be higher or lower. This occurs because the rate on the mortgage bonds is lower than that on debentures, but the weights are shifting toward the riskier, higher rate debentures. g. + A call provision increases the risk to the bondholders, so a higher rate would be required. h. - The sinking fund calls for repayment over the life of the bond. This lowers somewhat the risk of the issue, hence leads to lower rates. i. + This would raise the interest rate because a lower rating implies greater risk. 2-2 Safety Rank a. Income bond 8 b. Subordinated debenturenoncallable 6 c.