债券市场分析与策略第7版答案.docxVIP

PAGE PAGE 174 Copyright ? 2010 Pearson Education, Inc. Publishing as Prentice Hall. CHAPTER 7 CORPORATE DEBT INSTRUMENTS CHAPTER SUMMARY Corporate debt instruments are financial obligations of a corporation that have priority over its common stock and preferred stock in the case of bankruptcy. In this chapter we discuss the following corporate debt instruments: corporate bonds, medium-term notes, commercial paper, and asset-backed securities. The discussion of convertible corporate bonds and asset-backed securities come in later chapters. CORPORATE BONDS Corporate bonds are classified by the type of issuer. The four general classifications used by bond information services are utilities, transportations, industrials, and banks and finance companies. Features of a Corporate Bond Issue The essential features of a corporate bond are straightforward. The corporate issuer promises to pay a specified percentage of par value (the coupon payments) on designated dates and to repay par or principal value of the bond at maturity. Failure to pay either the principal or interest when due constitutes legal default, and investors can go to court to enforce the contract. The promises of corporate bond issuers and the rights of investors who buy them are set forth in great detail in contracts called bond indentures. The indenture is made out to the corporate trustee as a representative of the interests of bondholders; that is, a trustee acts in a fiduciary capacity for investors who own the bond issue. Most corporate bonds are term bonds; that is, they run for a term of years, then become due and payable. Generally, obligations due in under 10 years from the date of issue are called notes. Some corporate bond issues are arranged so that specified principal amounts become due on specified dates. Such issues are called serial bonds. Security for Bonds Some companies own securities of other companies; they are holding companies, and the other companies are subsidiaries. To satisfy t