boken kap 16 del 4

Question 1

Q9: Why do Islamic bonds not pay interest?

Answer 1

A: Paying interest is not compliant with Sharia law, which prohibits making money from money.

Question 2

Q10: What are green bonds?

Answer 2

A: Fixed-income securities that fund climate-related or environmental projects.

Question 3

Q11: What are the two forms of direct private long-term financing?

Answer 3

1. Term loans.
2. Private placements.

Question 4

Q12: What are term loans?

Answer 4

A: Business loans with maturities of 1-15 years, often amortized over their lifetime. Lenders are banks and insurance companies.

Question 5

Q13: How do private placements differ from term loans?

Answer 5

A: They have longer maturities and a limited number of investors.

Question 6

Q14: What are three differences between direct long-term loans and public issues?

Answer 6

1. Direct loans avoid stock exchange registration costs.
2. Direct loans often have more restrictive covenants.
3. Direct loans are easier to renegotiate.

Question 7

Q15: What is the concept of loan syndication?

Answer 7

A: Large banks sell part of a loan to a syndicate of other banks, creating individual agreements with the borrower.

Question 8

Q16: Why is loan syndication useful?

Answer 8

A: It allows big banks to share the risk and smaller banks to participate in larger loans they couldn’t otherwise handle.