What is a corporate bond? why would a company use bonds as a source of financing?

1 answer:

4 0

Answer and explanations : In simple words, corporate bonds refers to the debt securities that are issued by the corporations for capital funding. Companies are obligated to make return on such investments and some time these debts are support by some asset as collateral. In other words, these are fixed obligations.

The reason behind issuing corporate bonds for funding is , first they are the cheapest sources of finance after retained earnings. Companies are obligated to pay return on these hence for the security off return investors usually purchase them even at lower prices.

Also these shareholders can be repaid back fully and have no control over the operation of the business which gives management some flexibility.

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What is the typical relationship between time and interest rate?

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The answer is they seem to go together, since as time passes, the higher the interest rates grow or vice versa, while time passes interest rates may fall as well, but commonly, as time passes, so does interest rates rise. This reactions may be seen in huge companies or organizations that have invested huge amounts of money that have grown overtime

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On December 31 of the current year, Pilozzi Company has the following information available:

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Answer:

On December 31 of the current year, can the Board of Directors declare and pay a cash dividend of $ 2 million

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Explanation:

Companies can pay dividends in cash or additional shares.

If the company don´'t have enough cash on hand to distribute the previously announced sum to shareholders, it may have to borrow funds to honor the dividend payment.

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The AFN equation assumes that the ratios of assets and liabilities to sales remain constant over time. However, this assumption

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Answer:

The answer is A True

Explanation:

AFN which is "additional funds needed" is a concept used commonly in business looking to expand operations and influence. Since a business that seeks to increase its sales level will require more assets to meet that stated goal, some provision must be made to accommodate the change in assets. AFN is a way of calculating how much of new funds will be needed, so that the firm can realistically look at whatever or not they will be able to generate the additional funds and therefore be able to achieve the higher sales level.

Economies of scale are cost advantage reaped by companies when production becomes efficient. Firms can achieve economies of scale by increasing production and lowering cost. This does not involve calculating of new funds needed for a realistic expansion of the firm.

Lumpy assets are assets that cannot be acquired in small increments but must be obtained in large, discrete units.

Excess Capacity indicates to a situation in which the demand for a company's goods and services is less than its production capacity. This situation can arise in any firm during the low point in a seasonal industry, where capacity is maintained to match the peak part of the season.

A constant ration can not be meet in this condition of economies of scale, lumpy assets, and excess capacity as these conditions can not be used in raising funds or additional funds that are needed by the industry in its expansion.

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Answer:effective-interest

Explanation:

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When independent measurers get similar results when using the same accounting measurement methods, the financial information is:

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Answer: verifiable

Explanation:

A financial information is verifiable when the independent measurers get similar results when using the same accounting measurement methods.

In this scenario, the independent measures use thesame method but do their work separately without them knowing the results gotten by the other person. When there's similarity in the results, it shows that the results are verifiable.

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