The spread between the interest rates on bonds with default risk and default-free bonds is called the risk premium.
A default-free bond is a bond in which the bond issuer would not miss scheduled payments of either the coupon or principal. Bonds issued by the government are generally considered to be default-free. This is because the government can print money to make payments.
A bond with a default risk is a bond in which the bond issuer can miss scheduled payments of either the coupon or the principal. Bonds issued by private individuals are generally considered to be bonds with default risk.
Bondholders usually demand a compensation for holding bonds with a default risk. This compensation is known as risk premium.
Risk premium = return on bonds with default risk - return on default- free bond.
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<span>Question number q 5.8: a company has a policy to sell goods on account with terms of 2/10, n/30. if a customer purchased $100 of merchandise from this company for cash instead of on account, the customer would pay</span>
Complete Question:
Shown below is a trial balance for Novelty Toys, Inc., on December 31,after adjusting entries:
Novelty Toys, Inc.
Trial Balance December 31
Cash $7,750
Accounts Receivable $6,375
Office Equipment $11,250
Accumulated Depreciation $3,000
Accounts Payable $3,875
Capital Stock $11,250
Retained Earnings $0
Dividends $3,750
Fees Earned $22,750
Salaries Expense $8,000
Advertising Expense $1,625
Depreciation Expense <u>$2,125 </u> <u> </u>
$40,875 $40,875
The total debits in the After-Closing Trial Balance will equal:
Select one:
a. $25,375.
b. $29,125.
c. $40,875.
d. $18,125.
Answer:
$25,375
Explanation:
The After-Closing Trial Balance is prepared once the closing entries are posted. This results in closing of expense and income accounts for the year and the resulting balance taken forward to retained earnings. This means that After-Closing Trial Balance would contain only permanent general accounts which are balance sheet items. In the given scenario, the balance sheet debit balances are as under:
Cash $7,750
Accounts Receivable $6,375
Office Equipment <u>$11,250 </u>
Total Debit Balance <u>$25,375</u>
Hence the option A is correct.
Answer:
(a)
Common pace of joblessness is a mix of auxiliary and frictional joblessness.
Basic Unemployment: Occurs contribution to modern rearrangement or innovative change.
Frictional Unemployment: When individuals are in the middle of occupations for example the way toward moving from one occupation to other.
On the off chance that an enactment making it progressively hard for the organizations to terminate laborers is presented, at that point despite the fact that the activity discovering rate will stay consistent, the consistent state joblessness will stay steady. Less individuals will stay jobless at a specific time.
(b)
The activity discovering rate will change provided that prerequisite of a severance bundle will build the expense of work. This implies the business will most likely decrease the pace of contracting which will along these lines increment the pace of joblessness. Subsequently, the enactment would diminish the activity discovering rate.
(c)
The expense of contracting will increment if an enactment like this is passed. The enactment presents the idea of severance bundle for terminated laborers. This expands the expense of employing for the firm. Along these lines, the business will diminish the employing to decrease the expenses. This will diminish the business rate in a nation which will make a higher regular pace of joblessness.
