1.Would you pls explain the sentence "The equity has a value greater then 0 because the debt is not due immediately". The co's assets would hopefully have grown by the maturity date and what remains after the debt is repaid would go to the shareholders, that I'm able understand. But what does this particular sentence mean???
2.Would you also please explain the terms buying, selling basis on pg 6 of the same chapter? If I plan to buy, what basis should I use? Why is the selling basis more prudent? Specifically does selling basis mean what I would obtain on selling?
3. Later on, in the same chapter, under defeasance, it says "however, you wwould have the old defeasance asset which would be highly likely to be worth a corresponding amount less" Is the old defeasance asset the original bond the company issued?
Last edited by a moderator: Oct 23, 2014