In 1987 RJR Nabisco,the Food and Tobacco Giant,had $5 Billion

question 128

Essay

In 1987 RJR Nabisco,the food and tobacco giant,had $5 billion of A-rated debt outstanding.In that year the company was taken over,and $19 billion of debt was issued and used to buy back equity.The debt ratio skyrocketed,and the debt was downgraded to a BB rating.The holders of the previously issued debt were furious,and one filed a lawsuit claiming that RJR had violated an implicit obligation not to undertake major financing changes at the expense of existing bondholders.Why did these bondholders believe they had been harmed by the massive issue of new debt? What type of explicit restriction would you have wanted if you had been one of the original bondholders?

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Definitions:

30,000 Words

A referential figure highlighting the importance of early childhood verbal exposure and communication within the home environment for linguistic and cognitive development.

Pragmatics

The branch of linguistics that studies the ways in which context contributes to meaning, including how speakers use and understand statements in different situations.

Morphemes

The smallest grammatical units in a language that carry meaning, such as words, prefixes, or suffixes.

Fast Mapping

A cognitive process in early language development where children rapidly learn and infer the meaning of new words from minimal exposure.