Microsoft Joins Companies in Deep End of Bond Pool

The video discusses the trend of large corporations, like Microsoft, taking on significant debt to finance acquisitions, such as LinkedIn. It highlights the role of CFOs in leveraging low yields and the impact of yield compression on corporate finance. The discussion also covers the choice between debt and equity, the influence of tax codes on borrowing, and the use of foreign currencies in transactions. The video concludes with a look at potential M&A activities fueled by cheap borrowing costs.

What is one reason for the increased demand for US corporate debt?

• High interest rates in the US

• Rising inflation rates

• Negative yields on bonds globally

• Decreased corporate profits

What is a potential consequence for CFOs who do not leverage up in the current financial climate?

• They may receive a bonus

• They could be promoted

• They might be dismissed

• They will be given more responsibilities

What financial strategy did Apple employ due to its overseas cash reserves?

• Issuing new equity

• Increasing dividend payouts

• Taking on debt

• Reducing capital expenditure

How does the tax code influence corporate borrowing decisions?

• It encourages companies to hold more cash

• It makes borrowing more expensive

• It affects the location of cash reserves

• It reduces the need for foreign investments

What is a potential risk of having access to cheap money?

• Higher interest rates

• Increased savings rates

• Decreased market competition

• Poor investment decisions