Activity 3

SQ3R Worksheet


Apply the SQ3R reading method to a chapter from one of your textbooks. Read through this entire worksheet before proceeding so that you can select a chapter of reading that will work with this exercise. The chapter will need to have at least 5 headings.


The 5 steps of the SQ3R method are :

  1. SURVEY:        Briefly preview the chapter.
  2. QUESTION:   Formulate questions to answer while reading.

III.            READ:            Read the chapter carefully to find meaning and answers.

  1. RECITE:         Recite major concepts at appropriate intervals.
  2. REVIEW:        Review chapter at periodic intervals to refresh memory.


  1. SURVEY:
  2. Take 5 minutes to preview the chapter:
  3. Check headings and subheadings.
  4. Inspect graphs, maps, tables, diagrams, pictures, etc.
  5. Answer the following:
  6. Title of selected chapter:

___Long-term debt financing____

  1. Number of pages:


  1. Estimated time needed to read chapter:

___3 hours____

  1. List the first five major headings in the chapter:

_____The Cost of Money________

____Common Long-Term Debt Instruments_______

_________Debt Contracts________

____Credit Ratings ________

_______Credit Enhancement _______


  1. Is there a summary at the end of the chapter?

____Yes, explaining the value of learning these things for healthcare managers___

  1. How are important words highlighted?
  • They are either written in cursive, bolded, or written on the side margin explaining the definition
  1. Are there footnotes or endnotes for this chapter?
  • Yes they have a list of the key concepts that we should have taken from the chapter


  1. Are there problems / questions for the chapter?

___Yes, 10 questions and 7 problems __

  1. What kinds of visual aids are found in the chapter?
  • There are screen shots that show us how to do the problems through excel. Graphs that the differences of debt to interest rates on different dates and the value of long-term and short-term annual rates. Tables that show a rating agencies credit ratings.
  1. Choose one visual aid and study it for 2 minutes. What did you learn?
  • I reviewed the table, something I didn’t notice before was the foot note at the bottom of the table saying that this particular agency uses a + and – modifiers for bond ratings below a triple A.




The QUESTION-READ-RECITE steps work best if all three steps are applied to a section (i.e. heading) before going on to a new part of the chapter. Below you will be asked to formulate questions from headings, read the text and write answers to these questions, and then recite these answers. You should do all 3 steps (Question, Read, Recite) for a heading before proceeding to the next heading. When you are finished you should have a minimum of 5 questions with their respective answers.




With each heading formulate at least one question that can be answered by the text. Write these questions in the margin of the book or in your reading notes. Copy these questions in a word document or scan the text pages read and attach them with this assignment.


III.       READ:


  1. Read the section carefully for meaning.
  2. Mark the text with underlining, arrows, notes, etc., to help you understand and recall main ideas and relationships.
  3. Summarize key ideas and answers to questions (from part II) in the margins of your book or in your reading notes. Copy these notes onto a separate sheet of paper or photocopy the text pages to be turned in with this assignment.

The Cost of money – In a capital environment what factors affect the supply and demand for capital investment?

  • Investment opportunities – The higher the profitability of the business, the higher the interest rate you can afford to pay lenders for use of their savings.
  • Time preferences for consumption – High time preferences way be willing to lend funds out of current income and forgo consumption if interest rates are high. Low time preferences are people who do not mind a lower interest rate because they are saving for the future.
  • Risk – The higher the risk the higher the interest rate. The lower the risk the lower the interest rate
  • Inflation – The higher the expected rate of inflation, the higher the interest rate demanded by savers. Debt suppliers must demand higher interest rates when inflation is high to offset the resulting loss of purchasing power.

Common Long-Term debt instruments – What different types of long-term debt can be used and for what situations?

  • Term Loan – Long-term debt obtained directly from a financial institution, often a commercial bank. A contract under which a borrower agrees to make a series of interest and principal payments , on specified dates, to a lender.
  • Bond – Long-term debt issued by a business or governmental unit and generally sold to a large number of individual investors. A borrower agrees to make payments of interest and principal, on specific dates, to the buyer or holder of the bond.
  • Mortgage bond – A bond issued by a business that pledges real property (land and buildings) as collateral. The issuer pledges certain real assets as security for the bond.
  • Senior debt/Junior dept – They are junior in priority to claims of senior mortgages, or first mortgage bonds.
  • Debenture – An unsecured bond. It has no lien against specific property as security for the obligation.
  • Subordinated debenture – A debt security that, in the even t of bankruptcy, has a claim on assets that is below (sub ordinate to) other debt. Cannot be paid until senior debt has been paid.
  • Municipal Bond – A tax-exempt bond issued by a governmental entity such as a healthcare financing authority. Long-term debt obligations issues by states and their political subdivisions, such as counties, cities, port authorities and toll road or bridge authorities.

Debt Contracts – What are debt contracts and what are they used for?

  • Indenture – A legal document that spells out the rights and obligations of both bondholders and the issuing corporation, In other words, the loan agreement for a bond.
  • Restrictive covenant – Designed to protect creditors from managerial actions that would detrimental to their best interests.
  • Trustee – An individual or institution, typically a commercial bank, that represents the interests of bondholders.

Credit ratings – What are the different bond rating agencies?

  • Standard & Poor’s
  • Fitch Ratings
  • Moody’s Investors Service

Credit Enhancement – How does credit enhancement work?

  • Insurance that guarantees the payment of the risk and repayment of principal on a bond even if the issuing company defaults

Interest Rate Components – What are the different components when seeking to find the interest rate?

  • RRF – Real Risk-Free Rate – the rate of interest on a riskless investment in the absents of inflation
  • IP – Inflation Premium – The premium that debt investors add to the real risk-free (base) interest rate to compensate for inflation.
  • DRP – Default Risk Premium – The premium that creditors demand (add to the base interest rate) for bearing default risk. The greater the default risk, the higher the default risk premium.
  • LP – Liquidity Premium – The premium that debt investors ass to the base interest rate to compensated for lack of liquidity.
  • PRP – Price Risk Premium – The risk that rising interest rates will lower the values of outstanding debt.
  • CRP – Call Risk Premium – on callable bonds, the amount of the premium depends on such factors as the interest rate on the bond, current interest levels, and time to first call (the call deferral period).

The Term Structure of Interest Rates – Does the structure change over time?

  • Yes

Economic factors that influence interest rate levels – What are the different factors and how do they influence the interest rate levels?

  • Federal Reserve policy – they can increase growth the money supply, lower short-term interest rates, tighten the money supply, and raise short-term interest rates
  • Federal budgetary policy – They finance the deficit which impacts the short-term and long term rates.
  • The overall level of economic activity – impact short-term interest rates more that long-term. The state of the economy such as a recession has a major impact.

Debt Valuation – How is debt valuation important to health services managers?

  • The lifeblood of any business is capital


  1. RECITE: Out loud, using your own words, from memory only.


  1. Stop after each paragraph or section, cover the text, then recite from memory the main ideas and answers to your questions.
  2. Check to see if your understanding was correct by reading in the text again.


  1. REVIEW:


  1. You should review the entire chapter as a whole immediately following your first reading. Recite the key ideas, don’t just reread. Cover the text and answer your questions. In your mind try to tie all the main ideas together into one coherent structure. This will greatly aid your understanding and memory.

Comment on your first review. How did it go?

  • It took a lot longer than normal, but to be honest I feel much more prepared about what I learned for the final than previously. I was really hard to see the bigger picture that the author was trying to convey. After tying it together I have come to see that each component is extremely important to building your business and keeping it alive. You want to make sure that you invest in the right thing in the beginning so that they don’t hurt you in the future.



  1. Your second review should be 24-48 hours after your first reading. Reviews should consist of glancing at key words and questions from your notes and margins of the text and then reciting the main ideas from memory. Write below the day and amount of time used for this second review of the selected chapter.
  • November 17th For about an hour.






  1. EVALUATE YOUR EXPERIENCE USING SQ3R. Which parts work best for you? What didn’t work well? Explain why.
  • The thing about this is that many of the questions I could ask for each of the sections were going to be very similar to the book questions. Something that I do that has worked well for me where to read the questions at the end of the book first and as I go on reading, I then look for the answers while I am reading. I guess in my case the book does a good job of asking the right questions for preparation into the reading.
  • I did like spending more time reviewing the headings and thinking about them before reading. Normally I just skip the heading, but I learned that headings have a lot to tell you about each section.

It took a bit long to make sure I understood each section well enough to continue on to the next section. I don’t think this is for me either, but I will take time from now on to review the section before going on to the next section