1.If an optimal capital structure exists, what are the reasons why too little debt is as undesirable as is too much debt?
2.How does a sinking fund function in the retirement of an outstanding bond issue?
3.What are some examples of restrictive covenants that might be specified in a bond’s indenture?
4.Define the following terms that relate to a convertible bond: conversion ratio, conversion value, and straight bond value.
5.If a convertible bond has a conversion ratio of 20, a face value of $1,000, a coupon rate of 8 percent, and the market price for the company’s stock is $15 per share, what is the convertible bond’s conversion value?