Answer:
The Answer is B) Rises in the secondary market decreases.
Explanation:
When the coupon rate on newly issued bonds<u> decreases</u> relative to older, outstanding bonds, the market price of the older bond rises in the <u>secondary market.</u>
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A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate
For example, a $2,500 bond with a coupon of 10% pays $250 a year. Typically these interest payments will be semiannual, meaning the investor will receive $250 twice a year.
If two bonds offer different coupon rates while all of their other characteristics (e.g., maturity and credit quality) are the same, the bond with the lower coupon rate generally will experience a greater decrease in value as market interest rates rise.
Bonds offering lower coupon rates generally will have higher interest rate risk than similar bonds that offer higher coupon rates.
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Highest return would be the correct answer. i belive
Answer:
Enterprise Fund due from General Fund (Dr.) $50,000
Service Revenue (Cr.) $50,000
Explanation:
The enterprise used its general fund to provide electricity to the citizens. It has a collection period of 30 days for the general fund. This collection period is receivable duration during which company service revenue is to be collected. The general fund used by enterprise fund is collected 30 days later.
Options Available are:
a) Cost
b) Cost plus the accrued interest paid.
c) Fair value plus the accrued interest paid
d) Fair value.
Answer:
Option D Fair Value
Explanation:
The reason is that the company will have to value this asset using the fair value because the company has invested in debt security for short term investment and wants to earn higher interest income from such investments. The price of debt security in the stock exchange has substantially fallen which means the company must realize the loss on its investment due to this decrease and the only method which provides fair view of the company is Fair Value method. So the debt stock must be recorded at fair value which is also in-accordance with the guidelines of International Accounting Standard Board.
