《财务管理基础》

20.2
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Long-Term Debt, Preferred Stock, and Common Stock
Trustee and Indenture
Trustee – A person or institution designated by a bond issuer as the official
representative of the bondholders. Typically, a bank serves as trustee.
• Bonds and Their Features • Types of Long-Term Debt
Instruments • Retirement of Bonds • Preferred Stock and Its Features • Rights of Common Shareholders • Dual-Class Common Stock
debt; known as junior debt.
• In this case, subordinated debenture holders rank behind debenture holders but ahead of preferred and common stockholders in the event of liquidation.
Mortgage Bond – A bond issue secured by a mortgage on the issuer’s property.
• The issue is secured by a lien on specific assets of the corporation.
• The market value of the collateral should exceed the amount of the bond issue by a reasonable margin of safety to help protect bondholders.
• Frequently, the security is convertible into common stock to lower the yield required by subordinated debenture holders (often less than regular debentures).
• The bonds are unpopular with investors (usually limited to reorganizations), but are still senior to
preferred and common shareholders in the event
of liquidation.
20.3
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Bonds and Their Features
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Types of Long-Term Debt Instruments
Junk Bond – A high-risk, high-yield (often unsecured) bond rated below investment
grade.
• These are bonds with a rating of Ba (Moody's) or lower.
• Principal investors are pension funds, high-yield bond mutual funds, and some individual investors.
Indenture – The legal agreement, also called the deed of trust, between the corporation issuing bonds and the bondholders,
establishing the terms of the bond issue and naming the trustee.
20.7
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Types of Long-Term Debt Instruments
Types of Long-Term Debt Instruments
Subordinated Debenture – A long-term, unsecured debt instrument with a lower claim on assets and income than other classes of
Debenture – A long-term, unsecured debt instrument.
• Investors look to the earning power of the firm as their primary security.
• Investors receive some protection by the restrictions imposed in the bond indenture, particularly any negative-pledge clause.
4. Discuss the advantages and disadvantages of issuing/buying the three different types of long-term securities from the perspective of both the issuer and investor.
After Studying Chapter 20, you should be able to:
1. Understand the terminology and characteristics of bonds, preferred stock, and common stock.
2. Explain how the retirement (repayment) of bonds and preferred stock may be accomplished in a number of different ways.
20.8
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Types of Long-Term Debt Instruments
20.5
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Types of Long-Term Debt Instruments
• A negative-pledge clause precludes the corporation from pledging any of its assets (not already pledged) to other creditors.
20.6
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
3. Explain the differences between various types of longterm securities in terms of claims on income and assets, maturities, security holders' rights, and the tax treatment of income from the securities.
Chapter 20
Long-Term Debt, Preferred Stock, and
Common Stock
20.1
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
20.10
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Bond – A long-term debt instrument with a final maturity generally being
10 years or more.
Basic Terms
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Coupon Rate
Maturity
Bond Ratings
20.4
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Income Bond – A bond where the payment of interest is contingent upon sufficient earnings of the firm.
• Frequently, there is a cumulative feature, which provides that any unpaid interest in a particular year accumulates. The cumulative obligation is usually limited to no more than three years.
• Liquidity varies depending on investor sentiments.
• Junk bonds were used frequently in the 1980s as a means of financing leveraged buyouts (LBOs).
20.9