BUS 251 Chapter Notes - Chapter 10: Private Placement, Debenture, Deferred Income

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 251
• Professor: Susan Bubra

Document Summary

Mortgage = lt debt w/ land/building/piece of equip pledged as collateral. Company & lender enter into at time of borrowing. Specifies terms of loan (i. e. interest rate, payment dates, length, etc) Most lt loans installment loans = loan principal repayments made periodically rather than at end. Periodic repayments usu blended payments (consist of both interest & principal components) 2 basic transactions related to these debts: initial borrowing, periodic loan payment. Covenant = conditions/restrictions that borrower must meet during load period. Bonds can be sold thru public offering/private placement. Public offering = open to all interested investors, indiv/institutional. Private placement = open only to specific institutional investors who have agreed to purchase bonds in advance (incl. banks, insurance companies, pension funds) Bond = formal agreement b/t borrower & lender that specifies how the borrower is to pay back lender, as well as any conditions borrower must meet while bond outstanding. Indenture agreement = bond"s terms, conditions, restrictions, covenants.