BUS 254 Lecture Notes - Promissory Note, Debenture, Commercial Paper

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 254
• Professor: Masood Kamlani

Document Summary

Chapter 10: long-term debt and other non-current liabilities. Long term liabilities are obligations that will be repaid over a period of longer than one year. notes payable money borrowed from a commercial bank. Commercial paper unsecured promissory note sold by one company to another. Formal agreement between a borrower (company) and lender (investor: specifies terms and conditions of repayment (indenture agreement) and any restrictions (bond covenants, generally sold through investment banker or syndicate. Public bond market or private placement indenture agreement: describes collateral. States face value, maturity date, interest rate: mortgage bond has real property, collateral trust bond provides shares or other companies bonds, debenture bond backed only by company"s creditworthiness, may allow for conversion to common shares, bond pricing. Bond pricing: the bond interest rate is lower than the required yield, the bond interest rate is higher than the required yield, the bond interest rate is the same as the required yield.