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2 years ago

A common reason for redeeming a bond prior to its maturity date is ______.

Business

1 answer:

Veseljchak [2.6K]2 years ago

4 0

Answer:

Correct option is (c)

Explanation:

Market interest rate and price of the bond are inversely related.if market interest rate falls and is lesser than stated interest rate (coupon rate), then the bond becomes attractive and its price increases. So, bond can be solved at present higher than the maturity value. This is the reason bond is redeemed before maturity.

On the other hand, if market rate increases, bond becomes less attractive as investors can earn more by investing at market interest rate. So price of bond falls and there is no point redeeming it before maturity.

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The consumer price index (CPI) can be used to measure inflation. There are potential problems with this process though that can

DIA [1.3K]

Answer:

a. Overstates Inflation.

In the case of Mary and Bob, the CPI would have already increased but in this case the price of the minivan increased as well. This will overstate inflation because it will not measure the general rise in price alone (inflation), it will also measure the rise in price as a result of the new minivan having better features.

b. Understated Inflation

Donna's case represents an understated inflation because the quantity shrank yet the price stayed the same. This means that the price is now buying less quantity than it used to which is inflation because more dollars are now required to buy the previous amount. This was not however recorded as there was no change in price.

c. Overstates Inflation

In the case of Zach, the inflation will be overstated because Zach is no longer buying bagels and is now buying muffins so continuing to use bagels as a representative good in the basket of goods used to calculate CPI would be overstating it.

d. Accurate representation of Inflation

In Chris's case, the increase in the price of the same shoe over the years has been because of a general rise in prices and not because it is a different model. It is the same shoe and its price is rising generally so this is an accurate depiction of inflation.

6 0

3 years ago

Digital Enterprise, Inc., promises to pay its employees a year-end bonus "if profits continue to be high and management agrees a

barxatty [35]

Answer:

D) An illusory promise

Explanation:

An illusory promise is not enforceable. Illusory promises are simply illusions that seem or appear to a contract, but are not.

In this case, there is no consideration at all, therefore none of the parties is bound by a contract. It would be different if the company promised to pay a bonus if its profits are xx%. How can someone determine what is considered high profits, and how can you be sure that management will agree?

It is basically like telling someone else that you will give them something if you are happy and willing to do it. How can someone determine if you are happy or not, and how can someone know if you are willing to do it or not?

6 0

2 years ago

On december 31, 2014, extreme fitness has adjusted balances of $940,000 in accounts receivable and $83,000 in allowance for doub

BaLLatris [955]

To record the write-off of receivables:

Allowance for doubtful accounts ----------------------------$24,000
Accounts Receivable -----------------------------------------------$24,000

To record the accounts receivable collected from the written-off receivable, first restore the accounts receivable with the following entry:

Accounts Receivable ------------------------------------------$1,900
Allowance for doubtful accounts ------------------------------$1,900

To record the collection of accounts receivable:

Cash -----------------------------------------------------------------$1,900
Accounts Receivable ----------------------------------------------$1,900

Or, the direct journal entry to record the collection of previously written-off accounts receivable is:

Cash ---------------------------------------------------------------$1,900
Allowance for doubtful accounts ------------------------------$1,900

8 0

2 years ago

An establishment owned by two or more persons in which only one person has unlimited personal liability for the business describ

chubhunter [2.5K]

Limited partnerships

4 0

3 years ago

Grand River Corporation reported pretax book income of $620,000. Included in the computation were favorable temporary difference

Alex

Answer:

The corporation's current income tax expense or benefit would be $86,940.

Note: The Internal Revenue Service (IRS) 2019 tax rate of 21% for corporation is used since the tax rate is not given in the question.

Explanation:

Details Amount ($)

Pretax book income 620,000

Favorable temporary differences (160,000)

Unfavorable temporary differences 106,000

Favorable permanent differences (152,000)

Adjusted income 414,000

Tax expenses (at 21%)  (86,940) 

Profit after tax 327,060

Therefore, the corporation's current income tax expense or benefit would be $86,940.

Note: The Internal Revenue Service (IRS) 2019 tax rate of 21% for corporation is used since the tax rate is not given in the question.

7 0

3 years ago