1. Detail for me the circumstances which must exist in order for "callable" bonds become beneficial to an economic entity?
2. One of the stockholder rights introduced in chapter 9 deals with the topic of 'preemption". Describe what this means. Provide an example to support your understanding of the topic.
3. Because preferred stock dividends in arrears must be paid before common stock dividends, should they be considered a liability and appear on the right-hand side of the balance sheet? Why or why not?
4. Let's examine your ability to calculate bond prices using a financial calculator. If a bond has a par value of $1,000 and a 10 year life, has an 10% annual coupon when the market is yielding 7%, what is the price of the bond? (Be sure to show your work)