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Monica [59]
3 years ago
5

Balance sheet and income statement data indicate the following: Bonds payable, 6% (due in 15 years) $1,200,000; preferred 8% sto

ck, $100 par (no change during the year) $200,000; common stock $50 par (no change during the year) $1,000,000; income before income tax for year $320,000; Income tax for year $80,000; common dividends paid $60,000; preferred dividends paid $16,000. Based on the data presented above, what is the number of times bond interest charges were earned (round to two decimal places)? Please show and explain steps.
Business
1 answer:
Sonbull [250]3 years ago
8 0

Answer:

Number of times bond interest charges were earned = 5.44

Explanation:

Given data,

Bond Interest Rate = 6%

Bond Amount = $1200000

Net Income before Income Tax = $320000

Bond Interest charges Earned :

= Bond Value × Interest Rate

= $1,200,000 × 6%

= $72,000

Net Income before Interest :

= Net Income Income Before Interest + Interest

= $320,000 + $72,000

= $392,000

Number of times bond interest charges were earned :

= Net Income before Interest and taxes ÷ Interest charges

= (392,000 ÷ 72,000 )

= 5.4444

Number of times bond interest charges were earned = 5.44

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Explanation:

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The correct answer is the option D: Both the foreseeable doctrine and the restatement doctrine.

Explanation:

On the one hand, the <em>foreseeable doctrine</em> dictates that there is a limit in the liability of party for those acts that he has done and that carry a risk of foreseeable harm. Therefore that this point of view establishes that a reasonable person would be able to understand and so to know when a certain action would bring certain damages to another party.

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3 years ago
The stockholders' equity section of the balance sheet for Potawatomi Corporation appeared as follows before its recent stock div
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Answer:

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2 years ago
Arbor Systems and Gencore stocks both have a volatility of 33%. Compute the volatility of a portfolio with 50% invested in each
fiasKO [112]

Answer:

<h3>In case of b, c, d ,e volatility is less than that of original stock</h3>

Explanation:

The formula to compute the volatility of a portfolio

=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}

Here,

The standard deviation of the first stock is σ₁

The standard deviation of the second stock is σ₂

The weight of the first stock W₁

The weight of the second stock W₂

The correlation between the stock c

a) If the correlation between the stock is +1

=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}

=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times1} \\\\=0.33

Hence, the volatility of the portfolio is 0.33 0r 33%

b) If the correlation between the stock is 0.50

=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}

=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times0.5} \\\\=0.29

Hence, the volatility of the portfolio is 0.29 0r 29%

c) If the correlation between the stock is 0.00

=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}

=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times0.0} \\\\=0.23

Hence, the volatility of the portfolio is 0.23 0r 23%

d) If the correlation between the stock is -0.50

=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}

=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times-0.5} \\\\=0.17

Hence, the volatility of the portfolio is 0.17 or 17%

e) If the correlation between the stock is -1

=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}

=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times-1} \\\\=0

Hence, the volatility of the portfolio is 0

<h3>In case of b, c, d ,e volatility is less than that of original stock</h3>

4 0
3 years ago
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