Exam 19: Markets for Corporate Senior Instruments: I

Unlike investing in a U.S. Treasury security, an investor who lends funds to a corporation by purchasing its debt obligation is exposed to ________.

There are three parties to a leveraged lease agreement. Name these three parties. What does the leveraged lease arrangement allow the lessor to realize?

Which of the below statements is FALSE?

What is Eurocommerical paper? Describe two ways in which it differs from U.S. commercial paper.

Commercial rating companies play a key role in the functioning of common stock markets in the United States, and their role in other countries is increasing.

Once a rating is assigned to a corporate debt instrument, can it be changed? Explain.

Describe a medium-term note. In your answer comment on its maturity and registration.

Which of the below statements is FALSE?

The commercial paper rate is higher than that on Treasury bills for the same maturity because ________.

Sourcing alternatives for a corporation include ________.

A syndicated bank loan is one in which a group of banks provides funds to the borrower, with the reference rate on the loan typically the New York Interbank Offered Rate.

An improvement in the credit quality of an issue or issuer is rewarded with a better credit rating, referred to as ________; a deterioration in the credit quality of an issue or issuer is penalized by the assignment of an inferior credit rating, referred to as ________.

A tax-oriented lease effectively allows the lessee to obtain a financing at less cost than by bank borrowing.

There are two possible ways for the lessor to finance the purchase of the equipment. Describe these two ways.

Commercial paper is a secured promissory note that is issued in the open market and that represents the obligation of the issuing corporation.

The market for lease financing is a segment of the larger market for ________.

Commercial paper ________.

Bank loans are an alternative to the issuance of securities.

Unlike corporate bonds, medium-term notes are typically issued on a ________ rather than underwritten by an investment banker.

________ is one in which a group of banks provides funds to the borrower.