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a)            What are the cash flows associated with a bond?             What are the distinguishing features of debt...

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Finance

  1. a)           What are the cash flows associated with a bond?
  1.            What are the distinguishing features of debt as compared toequity?

  1.            What is the indenture? What are protective covenants. Give someexamples.

  1.           Define the following types of Bonds:

               –   Euro Bond

               –   Zero-Coupon Bond

               –   Samurai Bond

               –   Equipment Obligation Bond

  1. a)           Differentiate between term Loans and Bonds.

Answer & Explanation Solved by verified expert
4.0 Ratings (482 Votes)
a The following are the cash flows associated with a bond Cash flows are the actual or virtual transfer of cash into Cash inflow and out Cash outflow of the business at a particular period of time Since a bond is a form of borrowing the cash flows involved are the interest and the principal which are known to be the couponyield and facepar value respectively b The following are the distinguishing features of debt as compared to equity Debt Debt is an amount that is payable to a person or organization for the amount of funds that has been borrowed Equity Equity is the ownership interest of shareholders in a corporation in the form of common stock or preferred stock Debt Equity 1The debt has less or no impact on control of the company 1 Equity requires controlling collectively and also involves imposed restrictions 2 Debt requires regular interest payments Company must generate cash flow to pay 2 Here no payment requirements it may receive dividends but only out of retained earnings 3 Debt allows beverage of company    See Answer
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