Answer:
a. A Ba1 corporate bond <u>2 (not investment grade)</u>
b. A ten-year BBB- corporate bond with a YTM of 7% <u>3 (medium risk but still investment grade)</u>
c. A secured loan from Argosy Gaming, which is a B- rated firm <u>4 (less risky since it is backed by a collateral)</u>
d. A senior subordinated bond from Argosy Gaming <u>1 (highest risk)</u>
Explanation:
There are two major bond rating agencies in the US: Moody's and Standard & Poor's.
Their rankings are very similar, although the letters vary a little:
AAA: safest
AA: low risk
A: low risk
BBB: medium risk
BB: a little bit more riskier
B: risky
CCC: very high risk
CC: even riskier
C: riskiest
D: junk, in default
Answer: arithmetic Average Return =11.33%
Geometric Average Return=10.33%
Explanation:
Returns per year
Year 1 16%
year 2 23%
year 3 15
year 4 -11%
year 5 30 %
year 6 -5%
Total = 68%
Arithmetic Average = Total returns 0f ( year 1 -6) / number of years
= 68%/6 =11.33%
Geometric Average Return is given as
= ((1 + R1) × (1 + R2) × ... × (1 +Rn))(1/n) - 1
((1 + 16%) × (1 + (23%)) × (1 + 15%) x (1+ -11%) x (1+30%) x (1+ -5%))^1/6 - 1
((1.16 x 1.23 x 1.15 x 0.89 x 1.30 x (0.95)) ^1/6
((1.16 x 1.23 x 1.15 x 0.89 x 1.30 x 0.95)) ^1/6 -1
(1.8035073 )^1/6 - 1
= 1.10328 -1 = 0.10328 x 100 = 10.328% =10.33%
Answer:
The firm's cash flow to creditors during 2018 was –$85,000
Explanation:
The firms cash flow to creditors would be calculating by substracting the interest expense of the firm to the long-term debt taken during the period.
Cash flow to creditors = Interest expense – Net new LTD borrowing
Cash flow to creditors = Interest expense – (LTDend – LTDbeg)
Cash flow to creditors = $255,000 – ($2,210,000 – 1,870,000)
Cash flow to creditors = –$85,000
Answer: See explanation
Explanation:
A pay off matrix has been attached.
If Fizzo decides to advertise, it will earn a profit of ($8 million) if Pop Hop advertises and a profit of ($15 million) if Pop Hop does not advertise.
If Fizzo decides not to advertise, then, it will earn a profit of ($2 million) if Pop Hop advertises and on the other hand, a profit of ($11 million) if Pop Hop does not advertise.
If Pop Hop advertises, then Fizzo makes a higher profit if it chooses (to advertise). On the other hand, if Pop Hop doesn't advertise, then Fizzo will make higher profit if it chooses (to advertise).
In a scenario whereby the firms act independently, the strategies that they will choose is that that both of the firms will prefer and choose to advertise.
Answer:
False
Explanation:
A country has comparative advantage in production if it produces at a lower opportunity cost when compared with its trading partners.
I hope my answer helps you
