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andrezito [222]
3 years ago
7

Amram Inc. can issue a 20-year bond with a 6% annual coupon at par. This bond is not convertible, not callable, and has no sinki

ng fund. Alternatively, Amram could issue a 20-year bond that is convertible into common equity, may be called, and has a sinking fund. Which of the following most accurately describes the coupon rate that Amram would have to pay on the second bond, the convertible, callable bond with the sinking fund, to have it sell initially at par? a. The coupon rate should be exactly equal to 6%. b. The coupon rate could be less than, equal to, or greater than 6%, depending on the specific terms set, but in the real world the convertible feature would probably cause the coupon rate to be less than 6%. c. The rate should be slightly greater than 6%. d. The rate should be over 7%. e. The rate should be over 8%.
Business
1 answer:
Reil [10]3 years ago
7 0

Answer:

B) The coupon rate could be less than, equal to, or greater than 6%, depending on the specific terms set, but in the real world the convertible feature would probably cause the coupon rate to be less than 6%.

Explanation:

Amram Inc. is issuing two bonds, one is not convertible and the other one is convertible and callable. Regardless of the coupon rate that they plan to set, convertible and callable bonds will usually (almost always) have a coupon rate that is lower than non-convertible or non-callable bonds.

Convertible bonds are bonds that can be converted or exchanged to common stock. Since convertible bonds offer more investment options, their risk is lower than non-convertible bonds.

Callable bonds is a bond that can be redeemed before the maturity date.

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Answer:

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3 years ago
SEC Rule 10b-18 allows an issuer to buy its shares in the open market:________.A. at any price that is reasonably related to the
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Answer:

B. at the highest independent bid or the last reported sale price, whichever is higher

Explanation:

SEC Rule 10b-18 was issued to create a safe harbor that reduces a company's possible legal liabilities related to repurchasing their own stock. Companies can decide to follow it or not, but if they follow it, they must comply with specific requirements that depend on the company's size and trading activities. Even if companies follow all the requirements of this "safe harbor", all legal liabilities are not eliminated, instead some specific provisions will not be considered to have been violated by the company.

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7 0
3 years ago
The existence of ending Work In Process Inventory necessitates the use of the 5minusstep process costing procedure. true or fals
tensa zangetsu [6.8K]

Answer:

The statement is: True.

Explanation:

The Work In Progress (WIP) Inventory represents the sources needed during the production of a good. While calculating costs for those sources it is necessary to follow the 5-steps of process costing which are the following:

<em>1)</em><em>  Determine the flow of units generated. </em>

<em>2)</em><em> Adjust the inventory to calculate the equivalent units. </em>

<em>3)</em><em> Identify the total cost. </em>

<em>4)</em><em> Calculate the average cost per equivalent unit. </em>

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8 0
3 years ago
Flexible Budget for Selling and Administrative Expenses for a Service Company. Cloud Productivity Inc. uses flexible budgets tha
Sauron [17]

Answer:

Total selling and administrative expenses budget for March are as follows:

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For sales volumes of $500,000 = $389,000

For sales volumes of $600,000 = $451,000

Explanation:

Note: See the attached excel file for the flexible selling and administrative expenses budget for March

A flexible budget can be described as a budget that changes with the level or volume of activity of a company.

In this question, sales volume is used as the level of activity and a flexible selling and administrative expenses budget for March for sales volumes of $400,000, $500,000, and $600,000 is prepared in the attached excel file.

Download xlsx
4 0
3 years ago
Suppose the reserve requirement is currently 20%. Instructions: Enter your answers as a whole number.
Vilka [71]

Answer:

Consider the following calculations

Explanation:

a,) required reserves = (20/100) x $300 million = $60 million

b.) Since second bank has reserve of $65 million but needed only $60 million so the bank can LEND reserves of $5 million in the federal funds market.

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3 years ago
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