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3 years ago

What are common characteristics or provisions of bonds?

Business

1 answer:

lions [1.4K]3 years ago

7 0

Answer:

Bonds refer to debt instruments wherein the issuer raises long term finance and agrees to pay the lenders a fixed coupon rate of payments periodically and principal repayment upon redemption.

Bonds are characterized by following :

Face value : This refers to the par value at which bonds are issued and coupon payments are fixed as a percentage of face value.
Fixed rate of coupon payments: Bonds are characterized by a fixed rate of coupon payments i.e interest payments to the lenders periodically and obligatory. It may be paid semi annually or annually.
Maturity : Bonds are to be redeemed by the issuer after a certain period ranging from, say 5 years to 20 years. This means the lenders will be paid back their principal upon such redemption.
Credit Ratings: Bonds are issued with credit ratings such as AAA or AA or BB. AAA is considered to be the best rating. The higher the credit rating, the more attractive such bonds are to the investors as it indicates better credit worthiness of the issuer company.
Issuer: The issuer refers to the agency or the company that issues bonds to the investors. Bonds may be issued by municipality, government or corporate firms. The terms differ accordingly.

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Sweet Company’s outstanding stock consists of 1,000 shares of noncumulative 5% preferred stock with a $100 par value and 10,000

avanturin [10]

Answer:

Option (D) is correct.

Explanation:

Preferred dividend per year:

= (Outstanding preferred stock × Par value of preferred stock ) × 5% preferred stock

= (1,000 × $100) × 5%

= ($100,000) × 5%

= $5,000

Any balance left over would be paid to common stockholders.

Year 1:

Paid to preferred stockholders = $2,000

Paid to common stockholders = 0

Year 2:

Paid to preferred stockholders = $5,000

Paid to common stockholders = ($6,000 - $5,000)

= $1,000

Year 3:

Paid to preferred stockholders = $5,000

Paid to common stockholders = ($32,000 - $5,000)

= $27,000

Therefore,

Total amount of dividends paid to preferred Shareholders:

= Year 1 + Year 2 + Year 3

= $2,000 + $5,000 + $5,000

= $12,000

Total amount of dividends paid to common Shareholders:

= Year 1 + Year 2 + Year 3

= $0 + $1,000 + $27,000

= $28,000

5 0

3 years ago

During the week, we will explore the differences between cash-basis and accrual-basis accounting, and learn the steps required t

Alex Ar [27]

Answer and Explanation:

Adjusting entries is to made for recording all types of expenses and revenues in a correct manner. There are some transactions such as accrued interest or revenue that could be realize at the time when the entries are depend upon the documents and transactions should be recorded. It is to be made in order to prepared the correct financial statements by considering the prepaid expenses that are adjusted, depreciation expense, unearned revenue etc

7 0

3 years ago

On March 1, 2022, Wildhorse Company acquired real estate, on which it planned to construct a small office building, by paying $9

Nitella [24]

Answer:

The amount to be reported as the cost of the land is $ 114,200

Explanation:

Cash paid for the land = $ 98,000

Net cost of demolishing old ware house = $ 11,000 - $ 3,100 = $ 7,900

Attorney's fee = $2,000

Real estate broker's fee = $ 6,300

Total cost of the land = Cash paid for the land + Net cost of demolishing old ware house + Attorney's fee + Real estate broker's fee

= $98,000 + $ 7,900 + $2,000 + $ 6,300

= $ 114,200

4 0

3 years ago

Afirm has consistently adjusted its allowance account at the end of the fiscal year by adding a fixed percent of the period's sa

wlad13 [49]

Answer: Please refer to the explanation below for the full answer.

Explanation: The allowance for doubtful debts acts as a holding account for any accounts in the Accounts Receivable that might not be collected. In other words any accounts that are written off as bed debts will be removed from this account.

Reasons why this account can become very large in relation to the Accounts receivable are:

1. An incorrect or high percentage may be used to estimate accounts that may be written off as bad debts. This can lead to an unnecessarily high allowance for doubtful debts account.

2. There might be an error in the overall calculations done.

3. A large amount of old bad debts that have not been removed from this account may still be sitting in the account.

4. Fraud

7 0

3 years ago

The monopolistic advantage theory suggests that firms in oligopolistic industries are likely to _______________ foreign direct i

Andreyy89

Answer:

Group of choices:

A. increase

B. reduce

C. ignore

D. not change

E. none of the above

The correct answer is A. Increase.

Explanation:

The company has, within the national sphere, a monopolistic advantage that should be extended abroad.

Monopolistic advantage theory can take many forms:

* Ability to control a specific product differentiated, because other companies do not have the know-how.

* Exclusive control over raw material or other necessary inputs / components.

* Low unit cost of production due to the large volume of it.

Limitations: Do not replenish because production abroad is the preferred way to exploit these advantages and not through exports or licenses.

8 0

3 years ago

Read 2 more answers