True or False: In general, term loans incur lower issuance costs than bond issues because (1) they require less formal documentation than bond issues, and (2) they are not registered with the Securities and Exchange Commission (SEC).

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Business

Serena Ochoa

23 December, 11:21

True or False: In general, term loans incur lower issuance costs than bond issues because (1) they require less formal documentation than bond issues, and (2) they are not registered with the Securities and Exchange Commission (SEC).

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Chance Calhoun · Answer 1

Answer:TRUE

Explanation: Term loans are privately negotiated between the borrower and the lender, term loans generally does not require documentation with the Security and exchange commission (SEC).

Bonds is a kind of loan given to a corporate or Government, it has a fixed interest rate, Bonds require adequate documentation and are not privately negotiated which makes the issuance cost to be higher when compared to the term loans and Bonds are securities which must be filed and documented with the securities and exchange commission (SEC).