FIN-3403 Lecture Notes - Lecture 7: Credit Theory Of Money, Sinking Fund, United States Treasury Security
Document Summary
Financial management of the firm - chapter 7 notes. Can be structured various ways (collateral, when principle and interest due, other terms) Structure governed by a negotiated legal document. Interest payments - tax deductible expenses to the company. Lenders/creditors may have ability to force behavior or restrict actions in certain circumstances. Missed payments and other de ned events play the company in default and subject it to legal action. Highly structured interest-only loan to a corporation (semiannual interest payments). Boilerplate terms and legal language so bonds are easily sold. Issue size greater than ,000,000 (liquidity in secondary markets) Coupon rate - coupon quoted as a percent of face value or de nition of oating rate. Par or face value - principal repaid at the end of the loan (most commonly ,000 per bond) Coupon frequency and form ( xed vs. oating) Maturity - time until face value is paid, usually given in years.
