Answer:
The cost of the company’s preferred stock financing is 15.7%
Explanation:
In this question, we are asked to calculate a company’s cost of preferred stock financing.
Firstly, we calculate the annual dividend of the company.
Mathematically, that is equal to dividend rate * par value
From the question, dividend rate is 16% while par value is $75
Thus, Annual dividend is 16/100 * 75 = $12
To get the cost of preferred stock, we employ a mathematical approach.
Mathematically, cost of preferred stock = Annual dividend/(current price - floatation cost)
From the question, current price is $80 while the floatation cost is $3.5 per share.
Cost of preferred stock = 12/(80-3.5)
= 12/76.5 = 0.157
This is same as 15.7%
Answer:
option (C) - 6.11%
Explanation:
Data provided :
Coupon rate one year ago = 6.5% = 0.065
Semiannual coupon rate = 
= 0.0325
Face value = $1,000
Present market yield = 7.2% = 0.072
Semiannual Present market yield, r = 
= 0.036
Now,
With semiannual coupon rate bond price one year ago, C
= 0.0325 × $1,000
= $32.5
Total period in 15 years = 15 year - 1 year = 14 year
or
n = 14 × 2 = 28 semiannual periods
Therefore,
The present value = ![C\times[\frac{(1-(1+r)^{-n})}{r}]+FV(1+r)^{-n}](https://tex.z-dn.net/?f=C%5Ctimes%5B%5Cfrac%7B%281-%281%2Br%29%5E%7B-n%7D%29%7D%7Br%7D%5D%2BFV%281%2Br%29%5E%7B-n%7D)
= ![\$32.5\times[\frac{(1-(1+0.036)^{-28})}{0.036}]+\$1,000\times(1+0.036)^{-28}](https://tex.z-dn.net/?f=%5C%2432.5%5Ctimes%5B%5Cfrac%7B%281-%281%2B0.036%29%5E%7B-28%7D%29%7D%7B0.036%7D%5D%2B%5C%241%2C000%5Ctimes%281%2B0.036%29%5E%7B-28%7D)
or
= $32.5 × 17.4591 + $1,000 × 0.37147
= $567.42 + $371.47
= $938.89
Hence,
The percent change in bond price = 
= 
= - 6.11%
therefore,
the correct answer is option (C) - 6.11%
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Answer:
The answer is 'Buy a Stock Index Future'
Explanation:
To take best advantage of this situation, Mr Smith should go long(buy) on this stock.
Stock Index Future js a method of derivates. Futures, like forward contract is a forward commitment which obligates the buyer to purchase an asset or the seller to sell an asset and have a predetermined future date and price. Future is used to hedge against worse future situations.
The 2018 journal entries for Milani<span> related to its investment in </span>Seida<span> are its share in net income and share in dividends. The investment in considered as investment in associate since there is already the significant influence in </span>Seida. These are the journal entries:
<span>Investment in </span>Seida 12,0000
<span> Share in net income of </span>Seida<span> ($30,000 x 40%) 12,000</span>
#
Cash ($110,000 x 40%) 44,000
<span> Investment in </span>Seida 44,000<span> </span>
<span> #</span>
