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How does the performance of a subsidiary company's bonds relate to its parent company's obligations?
How does the performance of a subsidiary company's bonds relate to its parent company's obligations?
Subsidiary company bonds are generally well-protected as the parent company is expected to cover its obligations; however, if the parent is not responsible for those bonds, this assumption may be misleading.
What does the earnings coverage calculation for bonds of subsidiaries typically include?
What does the earnings coverage calculation for bonds of subsidiaries typically include?
Earnings coverage calculations for subsidiary bonds include operations of both the parent company and its guaranteed subsidiaries.
In the context of bond guarantees, what does the term 'interest coverage' refer to?
In the context of bond guarantees, what does the term 'interest coverage' refer to?
Interest coverage refers to the ability of a company to meet its interest obligations, often represented as a ratio of earnings to interest expenses.
What potential risks exist for bondholders if a subsidiary company is unprofitable?
What potential risks exist for bondholders if a subsidiary company is unprofitable?
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Using the Indiana Harbor Belt Railway example, what does an interest coverage of 2.98 times indicate?
Using the Indiana Harbor Belt Railway example, what does an interest coverage of 2.98 times indicate?
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