Three conditions in which a term loan is appropriate are: (1) to finance an asset of intermediate-term life, thus hedging the loan with the cash…

What are the similarities and differences between: a. An equal payment term loan? An equal payment loan is a loan which is repaid in a…

A balloon and bullet each involve a large final payment to repay a loan. The difference is the amount. A bullet is the full principal…

a. Direct lease – a lease with only one lessor who owns the leased asset. b. Leveraged lease – a lease in which the lessor…

(1) specify the loan’s characteristics,(2) identify collateral if any, and(3) contain the protective covenants demanded by the lender to help assure the loan is repaid.

Why do many companies find off-balance-sheet financing attractive? How might a company’s investors bondholders and stockholders react? Off-balance-sheet is attractive to many companies because it…

Four benefits to the lessee are: (1) tax savings from the ability to deduct all lease expenses and/or the ability to transfer tax deductions to…

What is the difference between technical default and financial default? Which is more critical to bondholders? Default means not performing according to a loan agreement….

a. Indenture – the formal agreement between lender and buyer specifying the terms of the loan and the relationship of the parties. b. Trustee –…

Why were junk bonds so popular in the 1980s? Why are they less popular today? A junk bond is a bond which is rated below…