Question

A company with a market capitalisation of S50million is considering raising $1 million debt to fund a new 10-year capital investment protect The value of this issue is considered to be small in comparison to the company's market capitalisation The company is considering whether to raise the debt finance by either a "bond private placing' or a 'public bond issue. Which THREE of the following statements are correct?

Accepted Answer

An initial public bond issue will be administratively complex and relatively expensive for the relatively small amount of debt being raised whereas a bond private placing will be relatively less complex

Accepted Answer

An initial public bond issue can be arranged relatively quickly whereas a bond private placing can take up to a year to arrange.

Answer

An average investor is made aware of a potential initial public bond issue whereas the average investor is only made aware of a bond private placing after it has occurred.

Answer

The company's credit rating will be a key element in determining the interest rate payable and the potential success of either the public bond issue or the bond private placing

Answer

An initial public bond issue does not need to be underwritten whereas a bond private placing must be underwritten.

A company with a market capitalisation of S50million is considering raising $1 million debt to fund a new 10-year capital investment protect The…

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