Discussion 1:

Bonds Payable and Investments in Bonds

General Electric^® Capital, a division of General Electric, uses long-term debt extensively. In early 2002, GE Capital issued $11 billion in long-term debt to investors and then within days filed legal documents to prepare for another $50 billion long-term debt issue. As a result of the $50 billion filing, the price of the initial $11 billion offering declined (due to higher risk of more debt).

Bill Gross, a manager of a bond investment fund, “denounced a ‘lack in candor’ related to GE’s recent debt deal.” He said, “It was the most recent and most egregious example of how bondholders are mistreated.” Gross argued that GE was not forthright when GE Capital recently issued $11 billion in bonds, one of the largest issues ever from a U.S. corporation. What bothered Gross is that 3 days after the issue, the company announced its intention to sell as much as $50 billion in additional debt, warrants, preferred stock, guarantees, letters of credit, and promissory notes at some future date” (Alban, 2002).

In your opinion, did GE Capital act unethically by selling $11 billion of long-term debt without telling those investors that a few days later it would be filing documents to prepare for another $50 billion debt offering? Please explain your answer and discuss whether the action was illegal as well.

Reference

Alban, J. (2002, March 25). Gross shakes the bond market; GE calms it, a bit. Barron’s. Retrieved from https://www.barrons.com/articles/SB101684242469177…

Discussion 2

You read about and practiced with concepts concerning target customers and branding. Now you will apply what you learned to address soap products.

Topic: Targeting Business Customers

A soap company has been selling their soap to consumers with great success. However, recently they have become aware that their soap is also a tremendous grease cutter and could be sold to industry.

• Which category of business customers could the company target and why?