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blagie [28]
3 years ago
5

A customer bought a $1,000 par convertible subordinated debenture at par, convertible into common at $32 per share. If the bond'

s market price increases by 12.5%, the parity price of the stock will be:a. $32b. $36c. $37.50d. $38.40
Business
1 answer:
Pachacha [2.7K]3 years ago
5 0

Answer:

correct option is b. $36

Explanation:

given data

bought = $1,000 par convertible

convertible into common = $32 per share

bond market price increases = 12.5%

solution

we know that conversion ratio is fixed when the convertible security are issued and it does not change

we have bond is issued with a conversion price = $32

so as per each bond converting conversion ratio will be

conversion ratio =  \frac{1000}{32} = 31.25 : 1

so by every bond which is converted , then receives  = 31.25 share

so now bond price will be = $1125

parity price of the stock will as = \frac{1125}{31.25}

parity price of the stock  = $36

correct option is b. $36

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Yakvenalex [24]

Answer:

the amount of the adjustment in the Allowance for

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Explanation:

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The adjustment entry in the accountig will be

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3 0
3 years ago
Ari, Inc. is working on its cash budget for December. The budgeted beginning cash balance is $14,000. Budgeted cash receipts tot
Andreas93 [3]

Answer:

The company needs to borrow $25000 and option B is the correct answer.

Explanation:

If the ending amount of cash for the year is less than the desired ending balance, then the company will need to borrow to maintain the desired level of cash balance.

To calculate the amount needed to be borrowed, we first compute the ending cash balance for December. The ending cash balance will be,

Closing Balance = Opening Balance + Receipts - Payments

Closing Balance - December = 14000 + 127000 - 126000

Closing Balance - December = $15000

The difference between the closing cash balance and the desired closing cash balance is the amount that the firm will need to borrow.

Amount need to be borrowed = 40000 - 15000  =  $25000

6 0
3 years ago
Managers will utilize __________ skills with increasing frequency as they rise within an organization.
Nastasia [14]
<span>E. Conceptual and decision</span><span>

The Internal auditor is the person who reviews the operating and accounting control procedures adopted by management to make sure the controls are adequate.

Internal audit within the company is not only done to review operating and accounting control procedures but to recommend ways that will further operation and accounting control within the company. </span>
7 0
3 years ago
Iris, a calendar year cash basis taxpayer, owns and operates several TV rental outlets in Florida and wants to expand to other s
nasty-shy [4]

Answer:

C) Expense $23,000 for 2018.

Explanation:

Iris owns and operates TV rental outlets, so all the expenses she makes while investigating possible purchases of related businesses (other TV rental outlets) can be deducted from her income. This deductions can be made regardless of whether Iris ended up purchasing the new stores or not.  

6 0
3 years ago
You invested $4,500 in a project which gave you a return of 12.5% the 1st year. You were quite happy, but the 2nd year wasn't as
Furkat [3]

Answer:

4.9%

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The computation of the annual average rate of return over the three years is shown below:

Given that

Positive return in 1st year is 12.5%

The Negative return in 2nd year is 3.3%

And, the positive return in 3rd year is 5.5%

So, the annual average rate of return is

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4 0
3 years ago
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