Answer:
shift demand and supply for loanable funds to the right (up), increasing interest rates.
Explanation:
According to the Fisher hypothesis when there is an increase in the expected inflation there is an equal increase in nominal interest rates.
As interest rates rise demand and supply for loanable funds will rise. This is illustrated in the attached diagram. Interest rate moves from i0 to i1.
Inflation is a reduction in the purchasing power of money. When inflation increases money regulation agencies reduce supply of money as a way to reduce price increase. This in turn reduces the amount of loanable funds commercial banks have to give out
Answer:
$87,000
Explanation:
Calculation of the conversion cost for November.
Conversion cost can be defined as the combination of both direct labor costs and manufacturing overhead costs that are vital to help convert raw materials into product.
Using this formula
Total Conversion cost = Direct labor cost + Manufacturing overhead cost
Hence,
Direct labor cost $25,000
Add Manufacturing overhead cost $62,000
Total Conversion cost $87,000
Therefore the conversion cost for November is $87,000
Answer:
Its operating expenses were $ 3.588 B
Explanation:
The operating ratio is the ratio of operating expense to the operating or revenue generated.
This ratio is used for comparison of results from the operations of various industries.
Given that the operating ratio of 78% and the operating revenue is $4.6B, the operating expense T may be computed as
78% = T/4.6 * 100%
T = 4.6 *.78
= $3.588 B
Answer: The bondholders decided to convert the bonds into common stock because they believed that getting $2250 today is worth more than $120 interest every year and a $1000 principal payment at the end of the bonds life.
Explanation:
1) In order to find out the number of bonds issued we need to divide 750,000 (Total ) by 1000(Face value of each bond).Total number of bonds issues therefore are 750.
2) A 12 percent convertible bond means that the bond pays a coupon of 120 ( 0.12 * 1000) every year.
3) Each bond is convertible into 25 shares , which means if one bond is converted into common stock, the bond holder can earn $1750. We calculate this number by multiplying the number of shares which is 25 into the current market price of the shares which is 70.
4) Also the company is offering an extra $500 per bond for converting it which means (500/25) an extra $20 per share.
5) So in total the bondholder by converting a bond and selling the shares he gets by converting it can earn $2250 per bond which they bought for a $1000 and gives them 120$ of interest every year.
6) SO to conclude the bondholders decided to convert the bonds into common stock because they believed that getting $2250 today is worth more than $120 interest every year and a $1000 principal payment at the end of the bonds life.
Answer:
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