Corporate Debt & Bond Quotes — Q&A

Debt does not require giving up ownership — bondholders do not vote on business operations (unless default). Equity raises capital without repayment obligation but dilutes ownership and may require shareholder approval for major decisions.

(1) Unpaid wages, (2) unpaid taxes, (3) secured creditors, (4) unsecured creditors, (5) junior unsecured (subordinated debenture) holders, (6) preferred stockholders, (7) common stockholders. Bondholders are creditors; stockholders are owners paid last.

$100. Secured creditors have first rights to collateral ($600 applied). Of the remaining $500: $100 wages, $100 taxes, $300 more to secured creditor — leaving $100 unpaid ($1,000 − $600 − $300).

$1,021.25. Step 1: ⅛ = 0.125. Step 2: 102 + 0.125 = 102.125. Step 3: scoot decimal → $1,021.25.

$987.50. ¾ = 0.75 → 98 + 0.75 = 98.75 → scoot → $987.50.

Corporate bonds are quoted in eighths (or fractions reduced from eighths, e.g., 4/8 = ½). If the fraction is not in eighths or reduced from eighths, it is not a valid corporate bond quote.

$5,000 par (5 × $1,000), 10% coupon, matures 2040, trading at $955 per $1,000 bond. Annual interest on $5,000 par at 10% = $500.

M = $1,000 par units (5M = $5,000 par). Zr = zero coupon bond (replaces the coupon number followed by “s”).

Like corporate bonds — in terms of price in eighths (percentage of par). Yield-based muni quotes from the Series 7 are unlikely to be tested.