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Sveta_85 [38]
4 years ago
10

1) Why might investors prefer floating rate notes over a fixed rate bond?

Business
1 answer:
sladkih [1.3K]4 years ago
8 0

Answer:

These questions are incomplete since the article relating to Hologen company is not attached. However, I would answer them this way.

Explanation:

1) A floating rate bond has a shorter duration; almost zero and it has lower sensitivity to interest rates compared to a fixed rate bond.This means that the former has a lower interest rate risk. Investors tend to demand floating rate bonds when they expect future interest rates to rise because their prices would be close to their par values as their interest rates would also increase. On the other hand, fixed bond's interest rates are inversely related to their prices.

2)

For an issuing company, borrowing money floating rates terms could be riskier for cashflow management purposes . Every time interest rates increases, it means that the company would pay higher interests to lenders which could hurt its profitability. The fluctuations could also negatively affect future financial planning unlike issuing fixed rate bonds whose coupon payments are constant hence decreasing the volatility of earnings.

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he Steel Mill is currently operating at 84 percent of capacity. Annual sales are $28,400 and net income is $2,250. The firm has
nignag [31]

Answer:

-911.51 the debt will decrease if sales increase 12%

Explanation:

sales: 28,400

increase of 12%

new sales:  31,808

<em><u>profirt margin:</u></em>

2,250/28,400 = 0.0792 = 7.92%

income: 31,808 x 7.92% = 2,519.19

retained earnigns grow: (1-payout ratio) = 0.6

2,519.19 x 60% =  1,511.514‬

Increase in working capital: 5,000 x 12% = 600

Asset requirement - reteined earnigns grow = financial needs

600 - 1,511.51 = -911.51

8 0
3 years ago
1 1.3.2 Quiz: Specialization
Sati [7]

Answer:

B. An artist becomes an expert at designing websites for

restaurants,

Explanation:

Specialization means focusing on one or very few lines of business. It is concentrating on the products or services that a firm or an individual feels they are best suited.  Specialization leads to mastery in the trade or craft that one focuses on.

An artist concentrating on designing websites for restaurants becomes an expert in that business. He or she acquires operational efficiency, which brings his production costs down. The artist will be specializing in website designs for restaurants.

8 0
3 years ago
Consider two jobs, Job 1 and Job 2, to be processed on a single machine. It takes 7 days to process job 1, whereas the processin
aev [14]

Answer:

  • No job uses more than one machine simultaneously .
  • No machine processes more than one job simultaneously.
  • Only 3 hours will be needed to complete the jobs.

Explanation:

However, Job 2 can be completed at time 3 which is late by 1 hour.

Suppose that the processing times are exponentially distributed.

Let

  • The processing rate of job j on machine 1
  • The processing rate of job j on machine 2

Expected make span is minimized by processing the jobs in the descending (high to low) order of processing

Make span is the completion time of the last job processed. Although make span is defined as a completion time of a job, it actually measures how long the production facility should remain open.

3 0
4 years ago
A yield can be paid in the form of?
Helga [31]

Answer:

both a and b

Explanation:

3 0
3 years ago
Which type of company can list and trade shares on the stock exchange?
My name is Ann [436]
A publicly traded company are the only company's listed on the stock exchange.
7 0
4 years ago
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