A Firm Issues $200 Million in Straight Bonds at Par

question 96

Multiple Choice

A firm issues $200 million in straight bonds at par and a coupon rate of 7%. The firm pays fees of 4.0% on the face value of the bonds. What is the net amount of funds that the debt issue will provide for the firm?

• A) $182.4 million
• B) $211 million
• C) $192 million
• D) $202 million

Describe the Shelter Principle and its application in the context of negotiable instruments.

Comprehend the concept of taking an instrument “for value” and how it applies to the HDC doctrine.

Understand the implications of the FTC rules established in the 1970s for protecting consumers against HDC abuses.

Recognize and distinguish between "real" and "personal" defenses available against claims made by holders or HDCs.

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Definitions:

ADHD

Attention-Deficit/Hyperactivity Disorder, a neurodevelopmental disorder characterized by a pattern of inattention, hyperactivity-impulsivity, or both that interferes with functioning or development.

Stimulant

Substances that increase alertness, attention, and energy by accelerating the function of the central nervous system.

Self-Serving Bias

The common human tendency to attribute success to personal factors and failures to external factors for oneself.

Success Responsibility

The notion that individuals are accountable for their achievements and should take credit for their successes.