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3 years ago

Why are bonds known as fixed income investments?

Business

1 answer:

Alinara [238K]3 years ago

6 0

Answer:

Option D. All of the above

Explanation:

The reason is that on a fixed income investment, there are periodic income payments with agreed fixed interest rate. So the borrower also promise to make the full repayment of the principal in most of the cases and there are sometimes (not always) option to convert the amount lent into shares. The principal payment always fixed because the investor receives it either in the form of greater rate of returns or all of it in the form of principal repayment. This is agreed with the lender, So all the options are correct here. Option D is the right answer.

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J&R Renovation, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 16 years to maturi

g100num [7]

Answer:

After tax cost of debt = 5.44*(1-0.35)% = 3.54%

Explanation:

PV = 106

PMT = 6/2 =-3

N = 16*2 = 32 semi annual

FV = -100

Semi annual yield = 2.72%

Annual cost of debt = 2.72%*2 = 5.44%

After tax cost of debt = 5.44*(1-0.35)% = 3.54%

Using Rate function in Excel or Financial calculator

6 0

3 years ago

Purple Sage Producers Inc. is an oil drilling company. The company paid a dividend of $1.75 last year, and, in the past, its div

tino4ka555 [31]

Answer:

Option A is the correct one.

<u>The signaling hypothesis</u>

Explanation:

The idea that many actions taken by economic agents are motivated chiefly by the wish to send a positive 'signal' to other agents, rather than by their ostensible purpose. This can be a means of overcoming the problem of asymmetric information between transactors.

This strategy was implemented by the Purple Sage Producers Inc. and this resulted in increased stock price.

5 0

3 years ago

Liability to pay only under certain conditions is what

bija089 [108]

Liability insurance or legal liability

4 0

4 years ago

Pretend you make $750 worth of purchases on your credit card, your bill arrives saying your minimum payment

Arte-miy333 [17]

Answer and Explanation:

You will be charged credit card interest on the outstanding balance. Your credit card interest is added to your outstanding balance for each day past your due date of payment(after the month you didn't pay the full amount)

You made a purchase of $750 and paid $150 and so you have an outstanding balance of $600. This outstanding balance will be charged interest on daily basis. Let's assume your APR(your annual interest over 12 months) is 24%, your interest is broken down into months and then days. Your monthly interest is therefore 24/12= 2% and your daily interest = 0.02/30 = 0.00067= 0.0067% per day.

Based on this assumption, you will be charged 0.0067% interest on your outstanding balance each day till you make full payment(interest + outstanding balance)

8 0

3 years ago

Andrews Company accepted a note receivable from a credit customer who failed to pay their $2,000 Accounts Receivable balance. Th

Darina [25.2K]

Answer:

The journal entry which is to be recorded for the dishonored note is shown below:

Explanation:

The journal entry which is to be recorded for the dishonored note is as follows:

Accounts Receivable A/c..............................Dr $2,075

Notes Receivable A/c...................................Cr $2,000

Interest Revenue A/c......................................Cr $75

Being the note which is received got dishonored

As the note got dishonored so the accounts receivable account will be debited against the notes receivable account and the account of interest revenue is also credited.

Working Note:

Interest revenue = Amount of notes receivable × Rate × Months / Total number of months

= $2,000 ×5% × 9/12

= $75

6 0

3 years ago