When bonds are issued at a premium which means bonds are issued at more than their par value. This premium amount is amortized over the life of the bond and at the end of the life bond will be equal to the face value.
A bond that's trading at a premium means that its price is trading at a premium or higher than the face value of the bond. For example, a bond that was issued at a face value of $1,000 might trade at $1,050 or a $50 premium. Even though the bond has yet to reach maturity, it can trade in the secondary market. In other words, investors can buy and sell a 10-year bond before the bond matures in ten years. If the bond is held until maturity, the investor receives the face value amount or $1,000 as in our example above.
A premium bond is a bond trading above its face value or costs more than the face amount on the bond.
A bond might trade at a premium because its interest rate is higher than the current market interest rates.
The company's credit rating and the bond's credit rating can also push the bond's price higher.
Investors are willing to pay more for a creditworthy bond from the financially viable issuer.
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The rate of return on new investment is the growth rate in earnings will depend on the portion of earnings reinvested each period.
<h3>What is
Earnings Retention Rate?</h3>
Retention of Earnings refers to the company's earnings that are reinvested in the company.
Earnings proportionate to new investment made in the company through one of the forms of financing are referred to as the rate of return earned on new investment.
Thus, it is The rate of return on new investment.
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Answer:
$950,400 Favorable
Explanation:
The computation of direct manufacturing labor price variance is shown below:-
Standard quantity for production = 19,000 × 0.90
= 17,100
Direct Material flexible-Budget variance = Standard Quantity × Standard Price - Actual Quantity × Actual Price
= 17,100 × $60 - 1,200 × $63
= 1,026,000 - $75,600
= $950,400 Favorable
Therefore for computing the direct manufacturing labor price variance we simply applied the above formula.