Consider a Company with a Single Loan

question 67

True/False

Consider a company with a single loan. There are no interest payments on the loan, but the principal and interest are all due in two years. It is uncertain whether the cash flow the company will produce will be enough to pay off the debt. The pay-off to shareholders in this company resembles a call option.

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Definitions:

U.S. Legislation

Laws and statutes enacted by the legislative branch of the United States government.

Unionize

The process by which workers form or join a union to collectively negotiate with their employer over wages, benefits, and working conditions.

Railway Labor Act

A U.S. federal law enacted in 1926 to prevent interruptions to interstate commerce by providing for the settlement of disputes between railroads and their workers.

Government Mediation

The intervention by government agencies or officials to facilitate the resolution of a dispute between parties, typically in labor disputes.