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IgorLugansk [536]
3 years ago
13

(a) how are bonds rated? (b) how are these rating helpful to the investors?​

Business
1 answer:
Jet001 [13]3 years ago
7 0

Answer:

a) Bond rating is done by evaluating and considering all the relevant internal as well as external factors associated with the financial status of a business.

b) Bond rating helps in analysing the risk associated with the bond by analyzing its credit quality and thus helps investors taking decisions related to their investments.

Explanation:

a) Bond-rating is the letter grading system that is used to indicate the quality of the credit-related to the bond of various organizations. Bond-rating is done by evaluating and considering all the relevant internal as well as external factors associated with the financial status of a business. Internal factors may include the financial strength of the organization. External factors may include various networks with interested investors and other government organizations and policies related to the same.

There are three important agencies that analyze the credit quality of a bond. These agencies are Standard & Poor's, Moody's, and Fitch rating Inc.

b) Bond-rating help in analyzing the risk associated with the bond by analyzing its credit quality and thus helps investors taking decisions related to their investments. It helps the investors to study the stability and quality of a bond. Hence, higher-rated bonds are considered to be more stable and appropriate for investment purposes.

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You manage a company that competes in an industry that is comprised of four equal-sized firms that produce similar products. A r
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Explanation:

It is given that in the market there are four equal-sized firms that produce similar products. The market is saturated such that 10% industry-wide price rise would lead to 18% decline in units sold by all firms in the industry. Going further, there is a proposed legislation that imposes a tariff on a key input used by the industry, which on realization would result in the increase in marginal cost by $2.

This means that the market elasticity of demand is:

[ FIND THE ATTACHMENT FOR SOLUTION]

5 0
3 years ago
In risk management, What does risk evaluation involve
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5 0
4 years ago
Read 2 more answers
Pops' owners and managers use the company's income statement to ultimately determine the company's _________.
Thepotemich [5.8K]

​POPS' owners and managers use the​ company's income statement to ultimately determine the​ company's <u>double </u><u>bottom line</u>.

More about income statement:

One of the three financial statements on which stock investors rely is the income statement. (The balance sheet and cash flow statement round out the list.) Investors who wish to evaluate a company's profitability and potential growth must comprehend an income statement.

Morea about double bottom line:

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8 0
1 year ago
On January 1 st 2012, Everhart Corporation, a calendar year company issues $100,000, 5%, 5-year bonds dated January 1, 2012. The
Alborosie

Answer:

Interest expense 2894.7 debit

discount on Bonds Payable 394.7 credit

cash 2500 credit

Interest expense 2906.55 debit

discount on Bonds Payable 406.55 credit

interest payable  2500 credit

Explanation:

We have to solve for the 2013 year which is one year after the issuance ofthe bonds.

We solve for the bond issuance price and then, we construct the bonds schedule and take the numbers from period 3 and 4.

Issuance proceeds: present value fo the coupon payment and maturity at market rate:

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 2,500.000

time 10

rate 0.03

2500 \times \frac{1-(1+0.03)^{-10} }{0.03} = PV\\

PV $21,325.5071

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity   100,000.00

time   10.00

rate  0.03

\frac{100000}{(1 + 0.03)^{10} } = PV  

PV   74,409.39

PV c $21,325.5071

PV m  $74,409.3915

Total $95,734.8986

Now we will calcautlethe interest expense by multiplying carrying value by the market value and sutract from the cash outlay to determinate the amortization on the bonds.

7 0
3 years ago
In January of year 0, Justin paid $4,800 for an insurance policy that covers his business property for accidents and casualties.
ratelena [41]

Answer:

$4,800

Explanation:

The total amount of the premium can be deducted under the 12-month rule. The reason for this is that the insurance does not cover more than 12 months and can not cover any time that is outside the next year end.

8 0
3 years ago
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