The Statement Storage Corporation Bond Accounting Essay

The Statement Storage Corporation Bond Accounting Essay
Lyons Document Storage Corporation–Bond Accounting
Lyons Document Storage Corporation is a secure document storage company which was
incorporated in 1993. Said organization began as a family–owned stationery business which
refocused its business strategy upon the entrance of significant competitors; Staples, Office Depot,
and Office Max (Bruns, 2010). As the secure document storage industry had recently emerged and
showed rapid growth potential, organization executives implemented the decision to redirect
business strategies to capitalize on new market opportunities.
Consequently, the shift in business strategy required the purchase of storage facilities and equipment
to transport documents to and from said facilities (Bruns, 2010). Therefore, to finance the new
business direction the company issued $10 million in 20–year term bonds in 1999. Said bonds were
issued at a coupon rate of 8% and sold at a 9% market rate. Additionally, the organization was
advised in 2008 that said bonds could be redeemed early and reissued at lower interest rates; saving
the organization substantial costs in interest payments. As such, company president David Lyons
instructed employee Rene Cook to research said opportunity and provide information regarding the
effect of early redemption of said bonds.
Bond Discounts and Premiums Corporations issue bonds as a method of financing company
operations. As such, bonds may be issued as callable permitting the issuing organization to repay the
... Get more on HelpWriting.net ...

Financial: Bond and Money Market
Chapter 9
Question #1
What characteristics define the money market? –Money market securities are short–term
instruments with an original maturity of less than one year. These securities include Treasury Bills,
commercial paper, federal funds, repurchase agreements, negotiable certificates of deposit, banker's
acceptances, and Eurodollars. Money market securities are used to "warehouse" funds until needed.
The returns earned on these investments are low due to their low risk and high liquidity.
Question #7
Why do businesses use the money market? –Money markets are useful from a business standpoint
because they provide banks with readily disposable income to loan to businesses that need an inflow
of cash over a short amount of ... Show more content on Helpwriting.net ...
Another category, sovereign bonds is generally sold by auction to a specialized class of dealers.
Chapter 11
Question #2
Identify the cash flows available to an investor in stock. How reliably can these cash flows be
estimated? Compare the problem of estimating stock cash flows to estimating bond cash flows.
Which security would you predict to be more volatile? –Stock market investors can make money in
two distinct ways. First, they profit when the share price of the stock goes up by selling that
appreciated stock and realizing their gain. Second, stock market investors can enjoy a cash flow the
dividends paid by stocks. Investors who are interested in this second benefit of stock ownership
need to evaluate potential investments carefully in order to find the ones with the strongest and most
secure cash flow.
Question #5
What distinguishes stocks from bonds? –Stocks represent partial ownership of a corporation. If the
corporation does well, its value increases and you share in the appreciation. However, if the
corporation goes bankrupt, you can lose your entire initial investment. –Bonds represent a loan you
make to a corporation or government. Since bonds do not represent ownership, the bond holder
could lose their investment if the corporation dissolves, but are paid before owners of stock.

The Key Role Of The Commercial Rating Agencies
The pivotal role that the three large US credit rating agencies Moody's, Standard & Poor's (S&P)
and Fitch played in the recent subprime mortgage lending and the following financial crisis has led
to extended regulation of these agencies and requires significantly more regulation. Credit rating
agencies and the ratings they supply are critical information resource for investors. An error in the
credit rating process has a huge impact on buyers and sellers of credit. It also affects the overall
performance of the financial markets.
Oligopoly of the credit rating agencies
The rating industry is known as an oligopoly, because there are only three significant credit agencies
in the US – Moody's, Standard & Poor's (S&P) and Fitch. In an industry run by oligopoly, perfect
competition does not exist. Because each company has a large market share, they are said to have
market power, a situation where one or more of the participants is able to set the price or other
outcomes in some general or specialized market. The oligopolists have the ability to dictate the
market. In oligopolistic market one company may fear that if the other company rises price, rivals
will refuse to reciprocate and will take a substantial amount of its customers, leading to the firm's
large drop in sales. Since the transactors in bond markets are mostly institutional bond managers,
financial institutions should have the ability to receive the bond creditworthiness information from a
broader range of

Prada: to Ipo or Not to Ipo: That Is the Question, Again
The 15th
Financial Case Analysis Contest
Analysis Report
Case Name： PRADA: TO IPO OR NOT TO IPO: THAT IS THE QUESTION, AGAIN
Report Title： SWEET ARE THE USES OF IPO
Team Name： WINDTRACKER
DATE: 16/12/2012 Contents
ABSTRACT 1
1. Macro and Industry Analysis 3
1.1 Financing Environment 3
1.1.1 International Monetary Market 3
1.1.2 International Bond Market 7
1.1.3 International Stock Market 9
1.1.4 International Private Equity Market 10
1.2 Industry Analysis 10
1.2.1 Industry Life Cycle Analysis 11
1.2.2 Five Forces Analysis 13
2. Financial Analysis and Forecasting 20
2.1 Financial Analysis 20
2.1.1 Profitability Analysis 20
2.1.2 Debt Solvency Analysis 24
2.1.3 A Close Look at Prada's Cash ... Show more content on Helpwriting.net ...
Finally, conclusions are drawn to summarize the whole report to demonstrate you our major points.
1. Macro and Industry Analysis
1.1 Financing Environment
Combined with the background given in the case, we believe that before Prada intentionally spread
its financing strategy which is fit with its financial status, the international macroeconomic
environment investigation is necessary. Prada, a long history Italian enterprise, has the most direct
and convenient financing channels through the European finance market. In addition, the active
American market and strong Asia Pacific market also shall be taken into account.
Based on the above background, we looked up a large number of the 2010 international financial

market data from the People's Bank of China Journal and Chinese Social Science Financial
Statistics Database, and intercepted four quarters of the international financial market operation data
and analysis in 2010. We try to select the best financing channels from the point of view of Prada
according to these data.
In the following analysis, we will show four aspects of the 2010 international macro financial
markets from the international monetary market, international debt market, international stock
market and international private equity market.
1.1.1

U.s. Treasury Bond Market
2. U.S. Treasury Bond Market
Yields on U.S. treasury bonds especially on the bonds with a maturity up to one year decreased
significantly between 2007 and 2009 as shown in the graph below. The one–month treasury bond
yield decreased from 4.79% in January 2009 to 0.04% in December 2009. In the beginning of 2007
bond yields were very high and therefore mortgages takers with adjustable–interest rates had high
interest payments. All this led to a high number of default and strong decrease in house prices. This
general weaker economic situation led to a decrease in Bond yields. The decrease became even
faster at the end of 2007, when the more creditworthy borrowers were also unable to repay their
mortgages. As reaction to the bad economic situation in 2008 the FED has opened its discount
window and lowered the discount rate by 1% in order to make it cheaper and easier for banks to
access money. Both lead to a further decrease in the bond yields as people had no more trust in the
products sold by investment banks and therefore looked for save ways to invest their money. One of
this save options to invest money is lending money to the U.S. government in forms of U.S. Bonds.
So the change in yields basically happened because there was a high demand for save ways to invest
money and therefore a high demand for U.S. bonds. The high demand for bonds resulted in high
prices and thus low yields.
3. Bear Stearns
The failure of Bear Stearns began in 2007 as two hedge funds managed by

Medical Technology Company Finance Case Essay
1. What specific items of capital should be included in the SIVMED's WACC? Should before–tax or
after–tax values be included? Should historical or new values be used? Why?
Answer: WACC covers computation of SIVMED's cost of capital in which each category of capital
is proportionately weighted. All capital basis – common stock, preferred stock, bonds or any other
long–term borrowings – should be listed under SIVMED's WACC. We determine WACC by
multiplying the cost of the corresponding capital component by its proportional weight and then
adding: where: Re is a cost of equity Rd is a cost of debt E is a market value of the firm's equity D is
a market value of the firm's debt V equals E + D E/V is a proportion of financing that is equity ...
Show more content on Helpwriting.net ...
Should flotation costs be included in the component cost of debt calculation? Flotation costs are
typically included in the component of debt calculation as a part of calculating the nominal rate of
the debt' cost. The costs related to the process of getting new securities. Flotation costs cover both
the underwriting spread and the costs paid by the issuing company from the offering. Shown as a
portion of gross proceeds, costs usually rise as risks associated with the issue rise, or the size of the
offering decreases.
c. Should the nominal cost of Debt or the effective annual rate be used? Since the bond pays a
coupon semi–annually, and earns 4.75% in six months, it is possible to determine the effective
annual rate (EAR), which we have successfully calculated above. EAR = 6.6% Nevertheless,
nominal rates are typically used for the cost of debt, because total costs of issuance and sale of
securities decrease the net proceeds from the sale. These costs are naturally small on public debt
issues.
d. How valid in an estimate of the cost of debt based on 15 year bonds if the corporation normally
issue 30 year long term debt? The estimate is not exactly valid because coupon rates differ for 15–
and 30–year bonds. Generally, the cost of debt is higher for bonds with longer time to maturity. It
has to do with risk. The longer

arbitrage in the government bond market Essay
MGT 409 Case 1: Arbitrage in the Government Market
1.
In 1991, major discrepancies in the prices of multiple long maturity US Treasury bonds seemed to
appear in the market. An employee of the firm Mercer and Associates, Samantha Thompson,
thought of a way to exploit this opportunity in order to take advantage of a positive pricing
difference by substituting superior bonds for existing holdings. Thompson created two synthetic
bonds that imitated the cash flows of the 8¼ May 00–05 bond; one for if the bond had been called at
the year 2000, and one for if it hadn't been called and was held to its maturity at year 2005.
The first synthetic bond combined noncallable treasury bonds that matured in 2005 with zero
coupon treasuries ... Show more content on Helpwriting.net ...
Through similar calculations of the first synthetic bond, she found that she needed 0.0704 units of
the 2000 STRIP, and the price of this synthetic bond was $100.43.
What Thompson found was surprising because both of these synthetic prices were less than the ask
price of the 00–05 treasury bond. In normal markets this shouldn't be the case because the synthetic
bond would be worth more to investors since it does not have a redemption right to the government.
In other words, the callable bond should have a lower price than the synthetic noncallable bond.
2.
There are two ways that Thompson could exploit this pricing anomaly that she found. If she already
held the 00–05 treasury bond, then she could immediately capitalize on the price discrepancy by
selling the 00–05 treasury bond for the bid price of $101.125 and buying one of these synthetic
bonds. Whether to buy the 2000 synthetic bond or 2005 synthetic bond is up for debate and opinion
but it might be suggested to go with the 2005 one since the price of $98.78 is even smaller than the
price of $100.43 and there would be larger price impact. By selling the 00–05 bond and buying the
2005 treasury bond, she would be getting the same cash flows for an immediate lower price.
The second way that Thompson could exploit this pricing anomaly would be if

Market Analysis : Futures Market
Part One: Futures Market Analysis The market that I was following was the corn futures market for
July of 2017. All of my data in regards to futures prices by date can be found at barchart.com. For
the purposes of this report, you can view the summarization of this market by viewing the graph
titled "Futures Prices for July Corn 2017" attached here on the right. As you can see this market has
truly been anything but stable since January 16, 2017. As you look at the graph over this two and a
half month time span, you notice three general trends. The first being that from the beginning of this
analysis, January 16, up until February 15 where the market, overall, was on an upward trend
excluding the last week of January. From there, after it ... Show more content on Helpwriting.net ...
I've read many follow up articles on this issue, but none stood out like the one reporting the
potential of this armyworm reaching the Mediterranean and Asia. This article from agweb.com,
titled "Alien Armyworm Invading Africa May Reach Asia, Mediterranean," reported signs of the
armyworm spreading and potentially affecting more acres of corn. Combined these to article express
the upward trend in the market during this time. However, we have yet to explain that brief plummet
in this trend that happened during the last week of January. This plummet can be briefly explained
by the likes of another article from agweb.com, titled "The 20% Problem." This article touches on
the scare of the taxes that Trump wants to put on trade with Mexico. It discusses how Americans are
afraid that Mexico will no longer want to trade corn with us and thus leave us with a higher supply
of corn. This is the exact opposite scenario that the armyworm presented, as higher supply with the
same relative demand results in lower prices. Moving forward to our next big trend, which lasted
from February 15th until March 27th, showed an overall decrease in prices for this market. This
downward trend, is credited mostly to the Trump and Mexico trade talks that I previously discussed.
However, much more about these talks began to surface during this time. While reading many
articles about this issue, most of them tend to

Bond Market Trends
Topic 2 Bond market developments
Overview
Financial markets have been subject to significant changes in recent years due to the credit crisis.
Experts believed that risk was being under–priced, which was expressed in the markets by a narrow
spread. They believed that once the market corrected this under–pricing and re–priced the risk, it
would likely cause a dislocation in financial markets by overshooting its equilibrium. Hence the
prices, yields and returns on bonds have been significantly effected by the global financial crisis.
Looking at the effects this credit crisis had on the short term money market by evaluating bond
performance over the past 10 years can give us significant insight into the extent of this dislocation.
– ... Show more content on Helpwriting.net ...
Although Kangaroo bonds had a significant decline in the second half of 2007, they managed to
bounce back. This is due to overseas investors wanting to take advantage of the arbitrage that can be
gained from raising funds in Australia and converting them to US dollars when they need to instead
of raising funds straight in their own currency. This allows them to take advantage of slightly lower
funding costs, meaning the investor demand for kangaroo bonds would increase significantly. This
is the reason for recent upturn in the kangaroo bond market.
– the amount of bonds issued by financial institutions
Financial institutions have had a steady issuance growth and were not significantly impacted by the
credit crisis as they have such sound balance sheets. This makes investing with them fairly "risk
free" thus investors are confident enough to purchase their bonds. They still however had to widen
their credit spreads and shorten their average maturity, both to survive in the current climate and to
accommodate investor preference of not wanting to lock into any long term investment right now.
Banks also are able to keep their bond issuance constant as they use is as a precautionary measure to
raise enough funds to meet their obligations incase of further market dislocation.
– Explain the impact of the global financial crisis on the issue of bonds by securitization vehicles.
Bonds issued by securitization vehicles or SPV's

The Yield Spread Of A Corporate Bond And A Comparable...
2. Literature review
The yield spread is defined as the difference between the yield on a corporate bond and a
comparable government bond. Prior to a study done by Merton (1974) yield spreads were
considered to be mainly driven by expected default losses on corporate bonds, tax premiums and
risk premiums (Radier et al, 2015). However, Merton (1974) and more recent research has shown
that factors such as equity volatility, liquidity, interest rate levels and the slope of the treasury term
structure are also significant factors in determining changes in the yield spread (Radier et al, 2013;
Lepone & Wong, 2009; Peter & Grandes, 2007; Collin–Dufresne, Goldstein & Martin, 2001).
2.1 Equity Volatility
One of the three factors which Merton (1974) found to be a significant determinant of the yield
spread was the probability of default as indicated by the firm–specific equity volatility on the stock
market. Merton (1974) predicted a positive relationship between equity volatility and the yield
spread. According to Merton (1974), a short put option on the equity of a company is equivalent to a
corporate bond issued by that company. This means that any individual corporate bond yield should
have a positive relationship with the equity value of the firm (Jubinski & Lipton, 2012).
Radier et al (2015); Hibbert et al (2011); Campbell & Taksler (2004) all find evidence supporting
Merton (1974)'s prediction of a positive relationship. Radier et al (2015) is the only one of these
studies

Introduction of Malaysia Bond Market
INTRODUCTION
1.1 WHAT IS BOND?
In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. It is a debt
security, under which the issuer owes the holders a debt and, depending on the terms of the bond, is
obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed the
maturity. Interest is usually payable at fixed intervals (semi–annual, annual, and sometimes
monthly). Very often the bond is negotiable, i.e. the ownership of the instrument can be transferred
in the secondary market.
Thus a bond is a form of loan or IOU: the holder of the bond is the lender (creditor), the issuer of
the bond is the borrower (debtor), and the coupon is the interest. Bonds provide the ... Show more
content on Helpwriting.net ...
More importantly, Malaysia, among the key Islamic financial centres, offers a wide variety of
Islamic bonds that are based on Shariah compliant concept. As at end–Dec 2010, Islamic bonds
accounted for 39% of total bond outstanding.
1.3 BOND MARKET DEVELOPMENT IN MALAYSIA * With the shift in public policy in the
1980s to consolidate public sector activities and promote the private sector as the engine of growth,
a new financing pattern emerged. With this transformation of the economy, the decline of public
sector borrowing was compensated by an increase in financing by the private sector. The private
sector has relied on the banking system for its financing needs, of which a large portion was
intermediated through the banking system – the ratio of bank credit to gross domestic product
(GDP) in Malaysia was high at 149% in 1997. Nevertheless, the ratio of bank deposits to GDP was
also high at 154% and therefore banks were able to finance their lending operations from their
deposits. * As the banking sector was heavily exposed to the economic crisis that struck the nation
in 1997, it was very cautious in extending new credits. In the post–crisis period, loan growth was
low; for example in 1998 and 1999, growth was less than the target of 8% proposed by the
government. * The malignancy of the Asian financial turmoil was derived from the externally–
driven currency crisis with the internally induced banking crisis. In other

Pros And Cons Of Enhanced Debt Management
The yields given by Greece government bonds are very high. It reached 61% in July 2011 for a 5–
year bond, while the 10–year bond in Jan 2012 reaches 35%. The government bonds in Portugal,
Cyprus and Ireland have similar yields like Greece. High bond yields is burdensome to the country.
In order to solve this problem, Enhanced Debt Management is one of the solution.
1) cost is cheaper compare to bond financing The non–tradable debt instrument helps to raise funds
at the lower cost compare to the bond markets. The bank loan contract is one of the non–tradable
debt instrument. The non–tradable instruments will be stored at face value in book instead of
marked–to–market. The cost of this method is cheaper because of reduction in interest rate. The
rising bond yields is expected to worsen the debt of the country. This is due to the trading bonds
between the speculators. The speculators purchase large amount of government bonds to create
shortage to the market. This forces the government to rise yields and create a more worsen situation
to the country. A lower interest rate is required for the non–tradable debt instruments compare to
bond market yields during crisis. Since the non–tradable debt instruments are cannot be traded, there
is no market. This means that there is no speculation in the market. ... Show more content on
Helpwriting.net ...
However, this method does not directly address the massive and rising amount of non–performing
loans in the banking sector. In conclusion, Enhanced Debt Management can only provide an
alternative to eliminate the ongoing and expensive destruction of market value and the potential
output deadweight loss. This method is cheaper than the Troika's method (Werner,

Not-For-Profit Financial Analysis
Medicare and Medicaid cuts have placed financial pressures on both not–for–profit and for–profit
organization forcing them to seek other avenues to increase their equity position. In effort to
increase their equity positions, for–profit organizations may issue new shares to investors and make
every effort to increase their bottom line through the use of depreciation, net income and noncash
expenses. Not–for–profit's main source to increase their equity is through the making money from
operations, governmental grants, selling of real estate and donations (Zelman, McCue, Millikan,
Glick, 2014). Tax–paying entities typically lean towards issuing debt because of the potential tax
savings. One of the advantages of issuing debt ... Show more content on Helpwriting.net ...
If the cost of a device is given to be $400,000 which depreciates on the basis of straight–line basis
over five years with a zero salvage value, then the cost of borrowing the money to purchase it will
come out to be $60,000 which is financed at the rate of 15 per cent for five years. Since the before
tax lease payments per year are $80,000, then the tax rate for the Mega center is 40 per cent because
the after–tax cost of debt equals 9 per cent. From a financial perspective, the hospital should lease
the surgical device rather than borrow the money to purchase it since leasing would be more
profitable as compared to what it would get if it borrowed the amount to purchase the equipment
(Zelman, McCue, Millikan, Glick,

Notes On The And Corporate Bond Market
Apple Bonds in Switzerland
Introduction
In February 2015, Apple Inc. has completed the first issuing of bonds denominated in Swiss Franc.
Apple Inc. has successfully raised 1.25 billion Swiss Francs (USD$1.35 billion) from the sale. There
were two parts of bond which were 875 million Swiss Francs bond due to mature in November 2024
with coupon rate of 0.375% and a 375 million Swiss Francs 15–year bond with coupon rate of
0.75%. Due to the negative of Switzerland's government debt yield, Apple Inc. has taken a lot of
advantages from the market. Discussion
Bonds are long–term debts that are issued by government and corporations with financing
requirements. In corporate bond market, which is the largest source of capital for the companies,
bonds are all issued by corporations. The bond market has contributed to the direct debt financing
and price discovery. The corporate bond market is constituted with the primary market (issuing) and
secondary market (trading). The trading in corporate bonds helps to reveal the credit risk premium.
In corporate bond market, the risk is considered to be higher than the government bond and as a
result always a higher interest rate. Rating of these corporate bonds range from AAA to unrated can
help investor to make their decisions. But in general, most of them have an investment–grade ()
rating. The apple Swiss francs–denominated bond was rated at AA+ (by S&P), which was only one
notch under the highest AAA rating. Because Apple Inc. has a

Green Bond Market : The Rise Of The Green Bond Market
The most recent State of the Market Report on bonds and climate change found that from 2015 to
2016, the so–called "climate–aligned bond universe" grew by $201 billion to reach a total $895
billion of both labelled and un–labelled green bonds. Separating out the labelled green bond market
(as defined by the Climate Bonds Initiative), there was an increase of close to 100% with issuances
totaling $81.4 billion. It has been noted that despite this overall growth in the green bond market,
the growth rate is still far lower than expected and insufficient if we want to achieve our climate
targets. I believe these numbers – along with additional evidence – suggest that the acceleration of
the green bond market is simultaneously facilitated and ... Show more content on Helpwriting.net ...
This can move issuers toward a standard for information disclosure, but notably the GBP does not
give specific guidance on defining what is green nor does it issue guidelines for assessing greenness.
Additionally, the disclosure of information does not necessarily make it any easier for investors to
analyze green bonds as performing due diligence would still require a significant amount of time
and effort. The overall strengths of the GBP are in helping to harmonize guidelines and standards for
proceeds disclosure and allowing issuers to self–label green bonds with minimal additional costs
and burdens. In this way, the GBP can speed up the growth of the green bond market by lowering
the barrier for issuers to supply labelled green bonds and improving investor access to information
that can be compared or analyzed. As mentioned above, the GBP recommends that issuers seek
independent assurance from second–party opinions or third–party certification. Second party
opinions can be provided by consulting firms like Deloitte, Sustainalytics, and KPMG or by expert
organizations such as CICERO. These audits can contribute to greater investor confidence in the
greenness of such externally–labelled green bonds compared to a self–labelled bond. However, the
obvious trade–off is that hiring a second–party to perform this audit results in an additional cost to
the issuer. The use of different

Vietnam Bond Market
Introduction
In recent years, the issue of efficiently mobilizing capital has become the concern of all companies.
There are some ways of doing this: borrowing from the banks, issuing stocks or issuing bonds.
However, when the interest rate of borrowing from banks is very high due to high inflation, together
with the stock market is quite instable; calling for capital from bond market is much more preferred
by investors.
In the context of this report, some major points regarding the bond market in Vietnam are presented.
Firstly, a common picture about the Vietnam bond market is drawn. Next come the types of bonds
and major participants in this market. Finally, several ways by which bonds are issued are described
in details.
I/ ... Show more content on Helpwriting.net ...
However, Vietnamese individual investors still prove to be unprofessional for some reasons: Main
source of capital usually coming from banks, lack of reliable information about the market,
limitation in accurate evaluation of the value of bonds and the bond issuing organizations.
Therefore, they have tendency to invest following the majority: sell immediately when prices of
securities decrease and buy right away when prices increase. This will lead to the high fluctuation of
the market, so easily results in the losses suffering of many investors.
2. Fund managers
Fund management is the professional management of various securities (shares, bonds etc.) to meet
specified investment goals for the benefit of the investors. Fund management companies play an
important part in the development of securities market. Since the establishment of VietFund
Management, the first fund management company in Vietnam in 2003, until now, 38 fund managers
have been granted operation licenses by SSC. Among them, FPT Fund Management Joint Stock
Company has the highest chartered capital with 110 billion VND and Lotus IMC has lowest charter
capital with 5 billion VND.
3. Brokers
Broker has recently occupied the position of the hottest career for youngsters, although it is still new
in Vietnam. The term "broker" is used to indicate a qualified and regulated professional who buys
and sells all kinds of securities through market makers or

The Current Debt Default Crisis
This policy memo addresses the current debt default crisis in Argentina. Despite the fact that 93% of
the bondholders accepted reduced payment due to the bankrupt of Argentina, the two hedge fund
NML Capital and Aurelius Capital Management have demanded full repayment of the $1.5bn
(£920m) they are owed, and have sued to prevent the country from paying back only its restructured
bond . To relief the dilemma after July's ruling, the financial sector should persuade the 93%
exchange bond holders waive the RUFO to alleviate the current financial pressure over the next few
months.
Problem Statement and Strategic Issues
The Argentina's debt default crisis this year could be trace back to 2001's crisis. After that, the
government begin to ... Show more content on Helpwriting.net ...
One helpful method to restore this mess is to persuade at least 75% of our existing exchange bond
holders to waive the RUFO clause in order to avoid the hundreds of billions of new obligations
before RUFO expire, while in the meantime continue seeking financial assistance to pay back
holdout and restore our reputation. Rapid actions are required to solve this urgent crisis.
The importance of Argentina back to bond market is so self–evident. The low foreign exchange
reserve, which is totally $290 billion with only $160 billion available, is obvious insufficient to debt
repayment, let alone other use of foreign exchange reserve. Normally countries with similar
situation will choose to financing from bond investors. However being abandoned international
bond market makes even high interest rate sovereign bonds is too risky for investors and will
become more difficult to restore access to the world's capital markets without figure out the default
with no delay. This means the exchange bondholders have to receive their money as soon as
possible. Since there are already a group of bondholders begin to work with Deutsche Bank to
remove the RUFO clause , our government should send officials to help push enough creditors
approve this decision and sign the supplemental indenture. Moreover, government could conclude
new terms (on–table or off–table) to give extra compensate to exchange bondholders,

Goodrich Rabobank Interest Rate Swap Essay example
1. How large should the discount (X) be to make this an attractive deal for Rabobank?
2. How large must the annual fee (F) be to make this an attractive deal for Morgan Guaranty?
3. How small must the combination of F and X be to make this an attractive deal for B.F. Goodrich?
4. Is this an attractive deal for the savings banks?
5. Is this a deal where everyone wins? If not, who loses?
Introduction:
Players: Morgan Bank, Rabobank, and B.F. Goodrich, Salomon Brothers, Thrift Institutions and
Saving Banks
Goodrich:
In early 1983, Goodrich needed $50 million to fund its ongoing financial needs. However, Goodrich
was reluctant to borrow (short term debt) from its committed bank lines because of the following
reasons:
1. It ... Show more content on Helpwriting.net ...
Invest in short term treasury bills, large CD's of commercial banks.
Floating rate notes of major US banks whose yields were tied to the Treasury bill notes.
Buy Goodrich floating rate notes with a yield tied to the LIBOR.
Structuring of the Swap:
In the swap depicted above the following can be calculated:
1. Goodrich receives the following amount semi annually:
–(LIBOR+0.5%)+(LIBOR–x1)–10.7% = x1+11.2%
2. Morgan receives the following amount as fees: –(LIBOR–x1)+(LIBOR–x2)+10.7%–10.7% = x1–
x2.
Note: As stated in the case (footnote #2 on page 362) this fee can be anywhere between 8 basis
points and 37.5 basis points.
3. Rabobank receives following amount semi annually: –(LIBOR–x2)+10.7%–10.7% = x2–LIBOR
i.e. it will give out LIBOR – x2.

From exhibit 3 the following is also given:
4. Since Goodrich has BBB– credit rating it could raise capital at a fixed rate probably at 12.5% for
7–10 years.
5. Also, Rabobank could raise floating rate debt at LIBOR – 1/8% (LIBOR + ¼% – 3/8%) since it is
an AAA rated bank.
Therefore,
6. From (1), and 4, Goodrich saves the following amount in semiannual interest payments : 12.5% –
(x1+11.2%) = 1.3%–x1.
7. From (2), and (5) Rabobank saves the following amount in semiannual interest payments: LIBOR
– 1/8% – (LIBOR –x2) = x2 – 1/8%.
8. For this deal to occur,

The Impact Of Bond Market On European Government Debt...
2. The Impact of Bond Market on European Government Debt Problems
2.1. Bond Market
The bond market is one of the fixed–income markets that it is deals in with transaction of long term
fixed–income securities. Moreover, the bond is one of the financial instruments and then the
financial instruments are generally regarded as securities. In the bond market, there are two bonds
familiar to mass investors. One is called government bonds, and another one is called corporate
bonds. Firstly, as its name, government bonds are issued by government with maturities up to about
30 years. Usually, medium term bonds and long term bonds pay out fixed amounts of coupon
payments in semi–annually during the repayment period. But, the index–linked bonds pay out
alterable amounts of coupon payments in semi–annually because of the changes in inflation. The
reason of government bonds are always have a lot of attraction to investors is that investors are
generally referred to government bonds as bonds being free from default risk. With this
characteristic, government bonds are safer than most other financial instruments to invest. However,
the high return always with the high risk and vice versa that government bonds offers lower yields.
Secondly, the corporate bonds is the another one that are concerned more by investors in daily
transaction activities. There are three main sources for corporates to raising finance for their
investment projects, they are: retained earnings, non–marketable debt

Work Help
The future value of an investment will increase when
| | |the number of years increases. |
| | |the interest rate increases. |
| | |both a and b. |
| | |none of above. |
Question 2
When the compounding frequency increases (interest is paid more often), the future value of the
investment will
| | |increase. |
| | ... Show more content on Helpwriting.net ...
|
| | |the company's inventory is somewhat obsolete. |
| | |the company's inventory is more liquid. |
| | |the company's sales are higher. |
Question 9 The current ratio of a firm would equal its quick ratio whenever:
| | |the firm has negative liquidity. |
| | |the firm has zero debt. |
| | |the firm has zero inventory. |
| | |the ratios are calculated in such a way that they can never be equal. |
Question 10 Rollin's Corporation has a before– tax cost of debt of 12%, its beta is 1.2, the risk– free
rate is 10 percent, and the market return is 15 percent. The marginal tax rate of the company is 40%.
What is the cost of debt for Rollin's

Why Do We Need For Your Financial Calculator?
Female Speaker: As we begin looking at how you value bonds, you might want to have your
financial calculator out so you can practice some of the calculations that I am making in these slides.
You might want to pause and see if you can replicate those calculations as we go along. We can use
a timeline to lay out the features of bonds, you probably won't need to do this as solve bond
problems, but it might be helpful to look at one as we start out.
Just like any debt instrument, a bond has a specified maturity date, and a value at the maturity, that
we usually call the face values, although, it certainly is the future value. Like a debt instrument, it's
going to make interest payments periodically throughout its lifetime. We are calling that the value of
any investment and it is the present value of its future cash flows.
We will use time values of money, to present value the interim interest payments and maturity value
payoff, but present value those back to time period zero, today to determine what its price would be.
Let's consider the valuables that are associated with bonds and you will see that they are almost
exactly the same as those that we use with time value of money problems earlier.
So N is still the number of periods, the number if interest paying periods and I is the market rate of
interest, so that is a little bit different, that is the market rate, the prevailing rate of interest for bonds
of this type in the marketplace. Present value is price,

What Fundamentals Affect the Yield of Bonds in the...
What fundamentals affect the yield of bonds (Singapore market) By: G8 Lee Kang Wee Olivia Tan
Daryle–
‐alexis Tan Ho Guoming FIIM FNCE 102 Professor Huang Sheng Introduction As an
international financial centre with about 11% of GDP from financial services, we felt it would be
interesting to find out more about ... Show more content on Helpwriting.net ...
Inflation, Real Interest & Bond Yield Bond Yield Breakdown by Country of Risk (Refer to
Appendix A) Majority of the bonds on the market are issued by companies based in Singapore, with
627 issuances. Hong Kong companies are 2nd with 36 issuances. Bonds issued by Hong Kong
companies saw a spike in yield during 1997 and 1998, due to the Asian Financial Crisis that
impacted Hong Kong companies the most out of the list of countries above. China saw a similar
spike in 2009. Bonds issued by Singapore companies have been the most stable, with yield levels
staying around 5% –
‐ 6%. While the yield is rather low, the low volatility makes it an attractive
instrument for investors with low risk appetite. For bonds issued by companies from India, Malaysia

Advantages And Disadvantages Of Investment Bonds
In finance, bonds are an instrument of liability. The bond issuer owes the debt to the bond holders
and the holders owes the term of the bonds and can claim the principal once the maturity date
reached. Coupon can be paid at regular intervals such as semi–annual, annual or monthly. Besides
that, the bond usually is negotiable which means that in secondary market, ownership of the
instrument can be transfer to other people. In the secondary market, bonds are highly liquid. This is
because the transfer agents have medallion stamp the bonds at the bank.
Therefore, a bonds is a form of loan or IOU (I Owe You). The lender (creditor) is the holder of
bonds, the borrower is the issuer of the bond and interest is the coupon. The borrower with external
funds supply bonds for long–term ... Show more content on Helpwriting.net ...
As a creditor (lender), between bondholder and stockholder, bondholder have the priority to receive
the rendered in advance of stockholders but they have secure creditor when the company is facing
bankruptcy. The significant difference between bonds and stock is bonds normally have a defined
term, will redeemed after maturity date, however stocks can last long for many year until the
company have opposed to liquidation.
There are some pros and cons of taking bonds as an investment instrument. The disadvantages of
investing bonds are interest rate risk. For example, fixed rate bond are taking risk when the general
common interest rate increase and their market prices will fall. Decrease in market price of the bond
will bring an increase in the rate of return received from investing bond because the payment are
fixed. This situation will reflect the ability of investor to obtain a higher interest rate on their
investment. Furthermore, bonds have different of risk and only particular risk will affect certain
investor. Bondholders will influenced by price change in bond especially for financial institutional
such as mutual

Worldcom, Inc Corporate Bond Issuance Essay
WORLDCOM, INC: CORPORATE BOND ISSUANCE
Introduction
This case raises many interesting questions concerning the record setting issuance of corporate debt
by WorldCom, Inc. ("WorldCom"). Both the surprisingly voluminous structure of the proposed
issuance and the foreboding macro–economic climate in which it was slated spark concerns over the
risk and cost of the move. One of the first questions that must be addressed is whether WorldCom's
timing was appropriate. Next, the company's choice of structure for the bond issuance must be
analyzed. Finally, the cost of issuing each tranche of debt must be estimated in order to determine
how much WorldCom is actually giving up to achieve the $6 billion in funds.
Timing of the Bond ... Show more content on Helpwriting.net ...
In addition, WorldCom was not the only company issuing a large supply of bonds at that time. In
fact, there were many issues set to hit the market around the same time. The sudden influx of
corporate debt into the market would apply pressure on the price of the bonds while granting
investors a wide range of opportunity and control. In addition, the economic turmoil in Asia at the
time had caused a great deal of uncertainty about the future of the fixed–income market and the
overall economy, thus pushing investors towards default–free treasury securities and away from
corporate debt.
Structure of the Issuance
WorldCom has the option to extend its bank loan credit facility or to issue this large $6 billion in
debt. It plans to use the rolling commercial paper program to pay British Telecommunications for
MCI's share purchases, and then use bond proceeds to pay off the commercial paper program. This
signals that WorldCom does not need the money immediately for a single corporate purpose, and
does not need the money immediately. Therefore, perhaps it makes sense for WorldCom to issue the
bonds in smaller installments rather than flooding the market with $6 billion in debt all at once. The
first reason for this is that, if an underwriter must first purchase the bonds before selling to
investors, an underwriter may demand greater spread in order to justify taking down an entire $6
billion in debt using the bank's capital assets. The second

How A Company Needs Help Expand Into New Markets
A company needs funds to expand into new markets, while governments need money for everything
from infrastructure to social programs. The problem large organizations run into is that they
typically need far more money than the average bank can provide. The solution is to raise money by
issuing bonds (or other debt instruments) to a public market. Thousands of investors then each lend
a portion of the capital needed. Really, a bond is nothing more than a loan for which you are the
lender. The organization that sells a bond is known as the issuer. The bond market (also debt market
or credit market) is a financial market where participants can issue new debt, known as the primary
market, or buy and sell debt securities, known as the secondary market. This is usually in the form
of bonds, but it may include notes, bills.
A bond 's price fluctuates throughout its life in response to a number of variables. When a bond
trades at a price above the face value, it is said to be selling at a premium. When a bond sells below
face value, it is said to be selling at a discount. The coupon is the amount the bondholder will
receive as interest payments. It 's called a "coupon" because sometimes there are physical coupons
on the bond that you tear off and redeem for interest. However, this was more common in the past.
Nowadays, records are more likely to be kept electronically. The maturity date is the date in the
future on which the investor 's principal will be repaid. Maturities can

The Argentine Debt Restructuring Of Argentina
The Argentine debt restructuring is a process of debt restructuring by Argentina which began on
January 14, 2005, and allowed it to resume payment on the majority of the USD 82 billion in
sovereign bonds that defaulted in 2002 at the depth of the worst economic crisis in the nation 's
history. A second debt restructuring in 2010 brought the percentage of bonds, out of default, to 93%,
though ongoing disputes with holdouts remained. Bondholders who participated in the restructuring,
accepted repayments of around 30% of face value and deferred payment terms, and began to be paid
punctually; the value of their bonds also began to rise.The remaining 7% of bondholders later won
the right to be repaid in full.
As part of the restructuring process, Argentina drafted agreements in which repayments would be
handled through a New York corporation and governed by United States law. The holdout
bondholders found themselves unable to seize Argentine sovereign assets in settlement, but realized
that Argentina had omitted to provide for holdout situations and had instead deemed all bonds
repayable on pari passu (equal) terms that prevented preferential treatment among bondholders. The
holdout bondholders therefore sought, and won, an injunction in 2012 that prohibited Argentina
from re–paying the 93% of bonds that had been renegotiated, unless they simultaneously paid the
7% holdouts their full amount due as well.
Together with the agreement 's Rights Upon Future Offers ("RUFO") clause,

Stop Buying US Treasury Bonds
Among the concerns that were raised during a hearing in Congress was the possibility that foreign
governments would stop buying U.S. Treasury bonds, a practice used by governments to prevent
their currencies from appreciating against the U.S. dollar. Use the model of supply and demand to
describe the Treasury bond market and to predict the direction of quantity and price in this case.
Prediction of quantity and price of Treasury bond For determining the quantity and price
equilibrium for U.S. Treasury bonds, we will chart the supply and demand curve to find the
equilibrium price of the supply and demand. The general law of supply and demand is when there is
a high demand for something that is of a low supply, than the price and value of that supply will
increase. If there is a low demand for something that there is a high supply of, the price and value of
that supply with decrease (Rittenberg, Tregarthen, 2009). ... Show more content on Helpwriting.net
...
market of treasure securities is in the trillions. They have trillions of dollars worth of bonds written
to lenders. The majority of these lenders are foreigners. Although considered an extremely safe "no
risk" investment because the Government backs it, a countries currency can be reset and revalued to
the global market. The purchasing of a bond is essentially someone lending money to the
government for a period of time in which in return a secured small gain is realized and paid out.
There is a low interest rate that is cumulated of the years, earned and repaid back to the lender.
These security notes and bonds can be traded and bought to and from each other. There is a huge
amount of volume of bonds that are traded

Coupon Bond : Coupon Bonds
Coupon Bond – Coupon bonds are unregistered and coupons are attached to the bond and the single
interested has to be payee by the payable, also the coupon is been submitted semi annually. Coupon
bonds are also known as bearer bonds (Adair, T.A. Jr., Cornett, M.M., Nofsinger, J., 2015).
A. Compute the yield to maturity of Land'O'Toys bonds before the purchase announcement and use
it to determine the likely bond rating.
Answer A. Compute Yield To Maturity (YTM) =
N = 20 years
Par Value (PV) =–1,037.19
Payment On Monthly Time (PTM) = 32.50
Future Value (FV) = 1000
Carriage Paid To (CPT) I= 3.00%
Here, Yield To Maturity (YTM) * 2 (Adair, T.A. Jr., Cornett, M.M., Nofsinger, J., 2015) = 3.00% *
2 = 6.00%
Thus comparing the two values, that is the calculated value = 6.00% and the bond rating and yield
given in the problem says that by having Bond A yield can be 6.0%. Thus by looking at this, the
bond rating to be announced should be Bond A (De Spiegeleer, J., Schoutens, W., & Van Hulle, C.,
2014).
B. Assume the bond's price changes to reflect the new credit rating. What is the new price? Did the
price increase or decrease?
Answer B. Here, by assuming that the bond 's price will change and the new credit rating will be
reflected. The new Yield To Maturity(YTM) should be 7.3% that is yearly. Thus, the new price is as
mentioned below:
N = 20 years
I = 3.65
Payment On Monthly Time (PTM) = 32.50
Future Value (FV) = 1000 therefore , Carriage Paid To (CPT) PV =

The Risk of Corporate Bond Market
Purchasing a corporate bond has three primary risks attached to it; 1) market risk, 2) industry risk,
and 3) company risk. The US corporate bond market has trended lower over the last few years
although recently the rates have risen relative to the last year. The market risk is that bond investors
will continue to see the same type of rates in US Treasuries as they do in the corporate bond arena
and will have no reason to purchase corporate bonds. Last month the corporate bond yield averaged
2.12% and the 10–year average is 2.57%, so it still has a way to go to even get back to its 10–year
average. Since it is only a one–year bond that is being considered, the market risk is probably not as
high as the industry risk or the specific company risk. Considering the industry risk; the airline
industry is not an industry that is considered a safe and secure haven for corporate bond issues,
having witnessed a number of bankruptcies and slowdowns, bond investors usually demand higher
rates from this industry. As for specific company risk, Southwest Airlines (SWA) has the reputation
of a relatively well managed firm, which continues to show a profit albeit a much lower earnings per
share in 2011 than in 2012. SWA is still in a growth mode; in 2011 they purchased Airtran and
increased their presence into a total of 72 cities. Additionally, the company is repurchasing shares
and quickly paying down debt. I would purchase a Southwest 1–year bond with a yield of
approximately 5%. The

Essay on US Bond Market
You have been asked to write a training document about the US Bond Market for use in the new
employee–training program. In your document, you must make sure to address each of the
following:
1a: The key players in the market; and the types of investments available to both individual
investors and institutional investors,
Bond Characteristics
A bond is a "security" which gives the holder a financial claim on the issuer. This claim protects the
holder in circumstances in which the issuer is unable to pay the amount due. It is made formal by
the "trust indenture", a legal document, which specifies all of the bond's features and the legal rights
and obligations of all the parties to the agreement (http://www.finpipe.com/bndchar.htm). ... Show
more content on Helpwriting.net ...
For further discussion on the main types of bonds, click on the links below: Asset–Backed Securities
Convertible Bonds Corporate Bonds Eurobonds Extendible/Retractable Bonds Foreign Currency
Bonds Government Bonds High Yield or "Junk" Bonds Inflation–Linked Bonds U.S. Treasury
Inflation–Protected Securities (TIPS) Mortgage–Backed Securities Zero Coupon or "Strip" Bonds
1b. The way transactions are carried out,
The above links address some of these issues. In other words, the bond market is a market in which
the bonds of corporations and governments are traded (i.e., banks, etc.) and transacted in various
settings (i.e., banks, private sectors, government agencies) and in various ways (i.e, over the
counter, electronically, telephone, etc.) www.econ100.com/eu5e/open/glossary.html.
In fact, bond investments are carried out in several ways, depending on the type of bond:
The bond market is any place where newly issued and existing bonds are bought and sold, usually
before maturity, by investors looking for income. This market can be a physical trading area (banks,
public sector, etc.), but more often the bonds are traded electronically by investors using computers
and telephone communications www.state.il.us/treas/Education/Glossary.htm. In general, in the
bond market, however, trades bonds are also issued by corporation and government. • Companies
can

The Growth Of The Corporate Bond Market
In the last few years, a number of things have changed:
There has been a significant increase in new corporate bond issues (and other hybrid securities) that
can be accessed by sophisticated retail investors, including growth of issues by unrated companies.
Ways for retail investors to access corporate bonds have continued to develop.
Regulatory changes to reduce impediments to retail investment in corporate bonds are slowly
occurring.
Ultimately, the maturation of the corporate bond market depends upon three key factors: underlying
demand of investors; potential supply by corporate issuers; regulatory and other impediments to
connecting investors and issuers.
Access has long been a problem for individual investors with an ... Show more content on
Helpwriting.net ...
While there have been significant developments in the regulatory sphere to assist the development
of the retail corporate bond market, there remains some ambiguity about the treatment of SMSFs
and their trustees as sophisticated investors, and their consequent ability to participate in wholesale
market offerings. This ambiguity warrants resolution given the increasing importance of that sector
and the increasing relevance of fixed interest investments for funds with ageing members.
Apple bond
➢ Apple has priced a $2.25 billion Kangaroo bond issue, smashing the record for the largest
corporate bond issue in Australia.
➢ The deal is also the largest ever Kangaroo corporate bond. The Kangaroo bond is a term for
bonds sold by foreign entities into the Australian dollar market.
➢ The deal is seen as a major endorsement of Australia 's corporate bond market, which has at
times struggled to lure the world 's largest companies
➢ The company said the proceeds were intended for "general corporate purposes" including share
buybacks, dividend payments and to fund working capital, capital expenditure, acquisitions and debt
repayments
SABmiller
➢ Global beer giant SABMiller has completed its first Australian corporate bond issue, raising $700
million of

Canadian Corporate Bonds
Corporate Bonds are the financial instruments through which corporates can raise capital by
borrowing money from investors. In return company pays interest on the principal. And the
principal is returned to the lender after pre–determine period also called as maturity. It is more cost
effective to raise money through bonds than through equity. Even if the company is going through a
difficult financial crisis, it still has a legal commitment to pay interest and principal to lenders. Bond
investors have priority over shareholders on the company's properties in case of bankruptcy.
Companies issue bonds for a variety of purposes, including buying new assets, investing in research
and development, refinancing debt, or financing mergers and acquisitions. Corporate bonds are one
of the main products of the fixed income market. These instruments have similar features that of a
bank loan, except that they can be transferrable from one lender (investor) to another, and can be
traded in market which is known as corporate bond market. Trading is performed either on price or
yield basis. Bond usually trades either at premium or at discount to its face value. The quality of the
bond is derived from creditworthiness of the company or default risk. Based on potential default
risk, bonds are evaluated on credit rating ... Show more content on Helpwriting.net ...
Due to proximity and easy of accessibility, US corporate bonds are the biggest competitors to
Canadian corporate bond market. Due to domestic operation and high yield, it is cheaper for many
corporate issuers to issue bonds in Canada. But because of small size of market in Canada, it is very
difficult for Canadian corporations to distribute economical large issuance in domestic market as
compared to US market. Usually Canadian corporation issues less than $250 million issuance in
Canada. For absorption of more than $300 million issuance, these corporations usually rush to

Chap009
Chapter 9
Long–Term Liabilities
Compare financing alternatives (LO1)
E9–1 Penny Arcades, Inc., is trying to decide between the following two alternatives to finance its
new $80 million gaming center:
a. Issue $80 million of 5% bonds at face amount.
b. Issue 2 million additional shares of common stock for $40 per share.
Issue Bonds
Issue Stock
Operating income
$12,000,000
$12,000,000
Interest expense (bonds only)
Income before tax
Income tax expense (35%)
Net income
$___________
$___________
Number of shares 2,000,000 4,000,000
Earnings per share (Net income/# of shares)
$
$
Required:
1. ... Show more content on Helpwriting.net ...
2. Record the bond issue on January 1, 2012, and the first two semi–annual interest payments on
June 30, 2012, and December 31, 2012.

Record bonds issued at a premium (LO4)
E9–7 On January 1, 2012, Splash City issues $500,000 of 7% bonds, due in 10 years, with interest
payable semi–annually on June 30 and December 31 each year.
Required:
Assuming the market interest rate on the issue date is 6%, the bonds will issue at $537,194.
1. Complete the first three rows of an amortization table.
2. Record the bond issue on January 1, 2012, and the first two semi–annual interest payments on
June 30, 2012, and December 31, 2012.
Record bonds issued at face amount (LO4)
E9–8 On January 1, 2012, White Water issues $200,000 of 7% bonds, due in 10 years, with interest
Required:
Assuming the market interest rate on the issue date is 7%, the bonds will issue at $200,000. Record
the bond issue on January 1, 2012, and the first two semi–annual interest payments on June 30,
2012, and December 31, 2012.
Record bonds issued at a discount (LO4)
E9–9 On January 1, 2012, White Water issues $200,000 of 7% bonds, due in 10 years, with interest
Required:
Assuming the market interest rate on the issue date is 8%, the bonds will issue at $186,410.
1. Complete the first three rows of an amortization table.
2. Record the bond issue on January 1,

Debt Vs Decedent
"Debts due by the decedent" cannot constitute debts that have accrued after the decedent has passed
away. First, this conclusion is reached by a textual, plain–meaning, reading of the bond. Indeed, at
the time of the decedent's death, the decedent ceases to exist, and all that remains is the decedent's
estate. As such, any debts that arise after the decedent's death are not "debts due by the decedent,"
but they are debts incurred by the decedent's estate. This is so notwithstanding the fact that the State
of Maryland is within the class of entities that that a nominal bond secures. Stated differently,
although the nominal bond secures the decedent's debts to the State, the bond does not secure debts
to the state that accrewed after the decedent's ... Show more content on Helpwriting.net ...
In support, the State will rely on the text of the bond which provides that the surety is "obligated to
the State of Maryland." Moreover, the State will note that in Williamson, two other debts–one for
the decedent's credit card, and another for unpaid hospital bills–were properly recoverable against
the bond. Id. at 154. These distinctions are immaterial. The issue in this matter is not to whom
particular debts are owed, but rather, when the debts accrued. Although Williamson, is mandatory
authority for the resolution of this issue, the Court of Appeal's holding in that case embodies a
border concept of the workings of suretyship law that require this outcome.
3. Principles of Suretyship Require That Erie Cannot Be Liable for The State's Claim.
Not only does Williamson, expressly provide that debts incurred after a decedent's death cannot be
secured by a nominal personal representative's bond, but elementary principles of suretyship
prohibit a principal obligor and a creditor from unilaterally increasing a surety's exposure to liability
on a bond. Indeed:
[A] change in the agreement by the principal and the obligee, without notice or consent by the
surety, when it materially changes the risk, entitles the surety to discharge, acknowledging that,
when it is applicable, there is ample authority to support it. See Restatement (Third) of Suretyship &
Guaranty (1995) § 41, which, as pertinent,

Notes On Bonds And Bonds
Chapter One
Bond Basics
What are bonds?
Bonds are investment tools in form of a debt. When the government, corporate bodies, or
municipalities want to borrow from the public, they issue bonds. By investing in bonds, you are
simply lending your money to the issuer of the bond (government or a corporation) at an interest for
a given period of time. Usually bonds have a face value, which is the money being borrowed, the
coupon rate which is the interest rate to be paid to the investors and the maturity date, which is the
date you get paid the money you invested. Bonds are issued for varying period of time, may be three
months, one year or even five years.
When an organization issues a bond, it makes a commitment to you (investor) that it will make
regular (quarterly, biannually, or yearly) payment of the interest at a specified rate on the total
amount it borrowed from you (face amount) until the maturity date of the bond when it will repay
the principal. This simply means that when you invest in bonds you start earning interest regularly
until the maturity date of the bond when the issuer of the bond pays back the principle (money
borrowed). Because of the facts that you get paid interest regularly and the principle upon the
maturity of the bond, this investment instrument is often termed as a fixed income security.
Bonds alongside other investment vehicles such as term deposits and cash are often classified
together as income assets because they provide a reliable and

Mortgage Systems in South Africa
1. MORTGAGE SYSTEMS
2.1 INTRODUCTION
In South Africa, banks fund long–term mortgage loans with short–term deposits. This creates both a
liquidity and interest rate mismatch. Basel III has also introduced new regulation for banks that will
need to be addressed. Denmark offers a potential solution in the Danish mortgage model. In this
system long–term mortgages are directly funded with similar equal long–term bonds. This can
potentially solve the shortcomings in the South African banking and mortgage market and lead to
more efficiency. Mexico has recently implemented the Danish mortgage model. The Mexican
implementation can be analysed to investigate the efficiency and shortcomings the model brings to
an emerging market.
BANKING AND LOAN FUNDING STRUCTURE
During the nineteenth and twentieth century, housing ownership in South Africa was mainly
financed by building societies. This was from the effect from of the British population moving to
cities and towns. This resulted in a housing shortage. Friendly societies was created for the middle
class to overcome the shortage. These were non–profit institutions. The British brought the concept
to South Africa where building societies were introduced. The building societies became financial
institutions and later banks were formed. Since the move from building societies to mergers of
banks, mortgage lending became an important component of banks' balance sheets. Banks are the
most important providers of mortgage finance for housing

The Financial Crisis Of Australian Bonds
Prior to the crisis, the market comprised mainly bonds issued by the Australian banks and
asset‑backed securities. Together these accounted for just over half of the outstanding stock of
Australian bonds in June 2007. Bonds issued by the public sector were a relatively small share of
the market, at 16 per cent of the total outstanding
Overall, the size of the bond market in mid–2007 was equivalent to around 84 per cent of Australia
's annual GDP. In the subsequent seven years the stock of Australian bonds on issue has increased to
reach the equivalent of nearly 100 per cent of GDP. The increase has mainly been the result of debt
issuance by the Commonwealth and state governments to finance their budget deficits as they
sought to support ... Show more content on Helpwriting.net ...
Discuss the implications of this changing market for other vested parties in the Australian bond
market, namely for:
Central Government;
This changing market has had numerous implications for a various number of parties such as central
and state governments, Australian corporates and fixed interest fund managers. The evolution of the
Australian bond market over the past several years has been shaped to a large extent by the fallout
from the global financial crisis.
The Australian central government has been affected by this changing bond market as shown
through the substantial rise in the market share of commonwealth government securities (CGS).
However, the collective stock of CGS and semi–government bonds have fluctuated representing
40% of GDP in the first half of the 1990s, then falling to under 15% of GDP by 2005 and finally
regaining to approximately the 40% level by 2016/17. The vast majority of the post–crisis CGS
issuance has been purchased by non–residents attracted to the Australian Government 's AAA credit
rating and favourable level of yields relative to other highly rated sovereign issuers. As a result of
non–resident investors, segments of the Australian bond market were altered with over 60% of the
CGS market being controlled by non–residents at the end of 2013. Other implications resulted such
as the tendency for yields to follow developments in global markets. While the strong historical

Questions On Basics On Bonds
Basics on bonds
Naranchimeg Tumurbaatar
Webster University Abstract
The purpose of this paper is give idea to individuals what is investing, how it is beneficial to them,
specifically concentrated on how bond works, how to approach the bond market, and what should
consider when purchasing the bond, because thousands of people wondering how they invest their
money, where they should invest, and how the investing process works. It will be very helpful for
the individuals who are first time investors. Financial Paper: Bond Bond is basically IOU according
to Joshua; when you purchase a bond, company or government borrow your money in return they
will pay you back certain interest rate in length of the time on the agreement Company ... Show
more content on Helpwriting.net ...
Furthermore, bondholder can sell it before its maturity dates when investor needs money or it can be
sold more than what it is purchased. As you can see, bond investment increases your capital and
income with offering less risk (Esme).
How and where bonds are issued and traded
The process of issuing bond is very complex, because typically bonds do not directly involve issuers
and public and involve large amount because of the sum. The process involves three main groups:
issuers, underwriters, and purchasers (Chad). As I mentioned earlier, issuers are the corporations or
government who sell the bonds and borrow money from investors. Underwriters are the, who act as
an intermediary between issuers and investors, investment banks or other financial institutions that
helps issuers to sell their bonds. The good examples are going to be major broker–dealer firms like
Goldman, Merrill Lynch, Morgan Stanley, etc. Purchasers are the bondholders, who bought a bond
and lend the money and purchase the bond. Not like a stocks, bond investors do not have an access
to bond price right away. There is no such a thing that bond market is located in a building and
shows all the prices and changes show on the display. Basically, bond market is combination of
several numbers of extremely large bond dealers. The reason is there is no quoted price for the bond
for trade and it happened over the counter not in exchanges.
Major segments of bond
According to Gitman and Joehnk,

Notes On Bonds And Debt Investment
Bonds are financial instruments that are used as debt investment. Bonds are a means for an investor
to lend or loan money to an entity or organisation or the government. Time of maturity is usually
predetermined (Bodie, Zvi, Kane, and Alan 12). The interest rate for this transaction however might
or might not be fixed or be variable, otherwise known as the spot rate. The bonds are very powerful
instruments in the market nowadays. T–bills, which are government issued are instruments that are
used to show the performance of the market, since the interest rate attracted by this instruments is
the risk free interest rate. The higher this interest rate is, the higher the rate of return for the investor
in this market. For this project, five bonds have been selected to serve as the drivers of the bonds
investments section. In this selection, diversification has been applied both in industry and
geographical positioning of the markets so as to achieve as optimal as possible. The volatility in
price and the volatility in the currency exchange rate of the various markets and financial
instruments have also been considered. Highly performing instruments were selected and have been
considered for this project. This include, the US Treasury bond, Municipal bond (US), Cooperate
bond (US), Fortress bond (UK) and the Turkey treasury bond.
Inflation is a factor that is very highly considered in terms of investments and long term financial
commitments such

The Statement Storage Corporation Bond Accounting Essay

Recommended

Recommended

More Related Content

More from Anne Marie

More from Anne Marie (20)

Recently uploaded

Recently uploaded (20)

The Statement Storage Corporation Bond Accounting Essay