Bonds

1. Your firm is issuing $100 million in straight bonds at par with a coupon rate of 6% and paying total fees of 3%. What is the net amount of funds that the debt issue will provide for your firm?

2. Describe the kinds of domestic securities the Canadian government uses to finance the federal debt.

1. How does a sinking fund provision affect the cash flows associated with a bond issue from the company’s perspective? From a single bondholder’s perspective?

2. Why is the yield on a convertible bond lower than the yield on an otherwise identical bond without a conversion feature?

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