Question 1: Explain why selecting a target senior debt rating is a reasonable approach to choosing a capital structure. Use an example.
Question 2: Explain why a target senior debt rating of single-A is a prudent objective when there is only a very limited new issue market for non-investment-grade debt, and when investor willingness to purchase triple-B-rated debt is likely to be highly sensitive to the state of the economy. Use examples and relate it to the current economic conditions.