FINS1612 Lecture Notes - Lecture 7: Prime Rate, Current Liability, Credit Risk
Document Summary
Term loans or fully drawn advances purchasing land, premises, plant and equipment) Term loan a loan advanced for a specific period (3-15 years), usually for a known purpose (e. g. Fully drawn advance a term loan where the full amount is provided at the start of the loan. Mortgage a form of security for a loan. If mortgagor defaults on loan, mortgagee is entitled to foreclose on the property (ie. take possession of assets and realise any amount owing on the loan) land and property to lender (mortgagee = bank). Debentures (secured) and unsecured notes are corporate bonds!! Price of a fixed-interest security = pv of coupon stream + pv of face value. ), p increases: nb: if yield rate in market = coupon bond rate p would equal face value. E. g: since fixed-interest coupon rate = current interest rate p = face value of debentures = million, answer should be higher than m, because market interest rate has fallen.
