Response - Case 14-4 Issuance Of Bonds

Response - Case 14-4 Issuance of Bonds Rebecca Waldens case poll is just ab pop out an annunciation, which appe ared in the Financial World Journal, on October 15, 2009. This announcement stated the intention of workmanship Foods, Inc. to issue $750,000,000 of debentured bonds. It as well as states that copies of the course catalog and the related prospectus supplement whitethorn be obtained from Keegan Morgan & Co. Inc., Coldwell Bros. & Co., Robert stack & Co., and from Sherwin-William & Co. (Spiceland, Sepe, Nelson, and Tomassini, 2009, p. 941). emergency 1 Ms. Walden correctly states what is existence described by the announcement, which is that the bonds bequeath mature on October 1, 2019 and are being issued at 7.75% s usurp esteem, with a discount rate of 99.57%. The only problem with this scenario is that in the event of trade Foods declaring bankruptcy, they bequeath have no verifying to repay their investors. Debentured bonds are an unsecure enthro nement and results in the fraternity pickings a very bulky risk to offer them. If the company fails and is unable to pay those bonds, thither could be large jural repercussions as well as various government accounting system agencies taking a closer look at the practices of release debentured bonds in the future. Requirement 2 Next Ms.

Walden writes in more flesh out about the psychological reason behind the securities being priced as they were. She feels that the main motivation for this company is risk. The risk justifies the means and since trick Foods, Inc. appears to have a less than favorable bond observe they are trying to lure investor! s by the risk of a discounted rate of 99.57%. Will this risk work? Often it does. in that respect are many investors will in to take the thread hold on less than solid companies fooling in place to make more money. Requirement 3 Finally Ms. Walden talks about two accounting loves for Craft Foods, Inc. and how they recorded the sale. The first consideration she states is that the company must find out on what method...If you want to get a full essay, order it on our website: BestEssayCheap.com

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