Chat with us, powered by LiveChat 4.5 Assignment: Financing S&S Air’s Expansion Plans with a Bond Issue | Abc Paper
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Review the rubric to make sure you understand the criteria for earning your grade.
Using a Word document, complete the requirements of the Mini-case “Financing S & S Air’s Expansion Plans with a Bond Issue”, located at the very end of Chapter 7 in your course textbook.
Your response should take the form of a memo, as explained in the case.

For each of the ten bond features listed, briefly describe the likely impact of each of the features on the coupon rate demanded by potential bond investors when this new bond is issued.  Will it cause the required coupon rate to be higher or lower?
In addition, for each of the ten bond features listed, briefly describe the advantages or disadvantages, from S&S Air’s  perspective, of implementing that feature with the newly-issued bond.

When you have completed your assignment, save a copy for yourself and submit a copy to your instructor by the end of the workshop.

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Getting Started

When a bond is issued to the public, the corporation’s leadership
must make critical decisions regarding the various features to be
incorporated into the bond issue, such as collateral, seniority with
other outstanding issues, a sinking fund provision, etc. The cost to
companies of raising funding using bonds, the coupon rate, is
ultimately determined by the risk represented by the bonds to the
investor. Each bond feature affects risk in a different way. As a
result, they each have a different impact on the coupon rate
demanded by potential investors when a new bond is issued. In
this assignment, you will explain these features and their impact in
the form of a memo to senior management, including
advantages/disadvantages of the various features.

Upon successful completion of the course material, you will
be able to:

● Differentiate and explain the various features of a bond
issue.

● Communicate with senior management the advantages and
disadvantages of the various features of a bond issue.

● Distinguish among the various bond types, and their features
and issues related to bond markets.

Resources

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● Textbook: Fundamentals of Corporate Finance

Background Information

In this assignment, you will apply a number of the concepts
regarding various features of a bond issue in the form of a memo
to senior management, explaining the various features, assessing
their impact on the coupon rate demanded by potential investors,
and describing the advantages/disadvantages of those features in
order to assist senior management in the decision-making process
as a new bond issue is being developed by the corporation.

Instructions

1. Review the rubric to make sure you understand the criteria
for earning your grade.

2. Using a Word document, complete the requirements of the
Mini-case “Financing S & S Air’s Expansion Plans with a Bond
Issue”, located at the very end of Chapter 7 in your course
textbook.

3. Your response should take the form of a memo, as explained
in the case.

a. For each of the ten bond features listed, briefly
describe the likely impact of each of the features on
the coupon rate demanded by potential bond investors
when this new bond is issued. Will it cause the
required coupon rate to be higher or lower?

b. In addition, for each of the ten bond features listed,
briefly describe the advantages or disadvantages, from
S&S Air’s perspective, of implementing that feature
with the newly-issued bond.

4. When you have completed your assignment, save a copy for
yourself and submit a copy to your instructor by the end of
the workshop.

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