Regular versus special redemption prices, Financial Management

The call prices for various issues mentioned above are known as regular redemption prices. Point to be noted is that the regular redemption prices are above par until the first par call date. There are also special redemption prices for bonds redeemed through the sinking fund and through other provisions, and the proceeds from the confiscation of property through the right of eminent domain or the forced sale or transfer of assets due to deregulation. The special redemption price is usually par value. Thus, there is an advantage to the issuer of being able to redeem an issue prior to the first par call date at the special redemption price (usually par) rather than at the regular redemption price.

A concern of an investor is that an issuer may use all means possible to maneuver a call so that the special redemption price applies. This is referred to as the par call problem. There have been ample examples, and subsequent litigations, where corporations have used the special redemption price and bondholders have challenged them.

Posted Date: 9/8/2012 6:22:09 AM | Location : United States







Related Discussions:- Regular versus special redemption prices, Assignment Help, Ask Question on Regular versus special redemption prices, Get Answer, Expert's Help, Regular versus special redemption prices Discussions

Write discussion on Regular versus special redemption prices
Your posts are moderated
Related Questions
cost of capital, Financial Management The Nu-Nu Brothers Inc. (NNBI) has the following capital structure, which it considers to be optional: Debt 25% Preferred Stock 15% Common Equ

Cash flow matching strategy is used to build a bond portfolio wherein the cash flows of the bond portfolio exactly match a stream of liabilities. The most s

the importance of a balanced capital structure and the problems which are associated with high levels of gearing

Explain how management goals are incorporated into pro forma financial statements. Management put a target goal and forecasters makes pro forma financial statements under the

Why would an analyst use the Modified Du Pont system to calculate ROE when ROE may be calculated more simply? Explain. In fact, an analyst would not use the Modified Du Pont equ

what are the types of non-statuary reports?

Q. Future Value of a Series of Equal Cash Flows? Quite often a decision may result in the occurrence of cash flows of the same amount every year for a number of years consecuti

Explain Vernon’s product life-cycle theory of FDI. What are the strength and weakness of the theory? Answer:  As to the product life-cycle theory, companies undertake FDI at a ce

Q. Graphic Presentation of Organisation of Finance Function? Graphic Presentation of Organisation of Finance Function: - The following chart describes the organization of the f

(a).At the end of three years, how much is an initial deposit of $100 worth, assuming a compound annual interest rate of (i) 100 percent? (ii) 10 percent? (iii) 0 percent? (b).b. A