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WINSTONCH [101]
3 years ago
5

Rob Lowe would like to invest $100,000 in Franklin Inc., which is offering common stock, preferred stock, and bonds on the open

market. The common stock has paid $1 per share in dividends for the past three years, and the company expects to be able to double the dividend in the current year. The current market price of the common stock is $10 per share. The preferred stock has an 8% dividend rate. The bonds are selling at par with a 5% stated rate.Required1. Explain Franklin’s obligation to pay dividends or interest on each instrument.2. Recommend one type of investment over the others to Rob and justify your reason.
Business
1 answer:
jeka57 [31]3 years ago
8 0

Answer:

1. Franklin Inc. is not under any legal obligation to pay divided to common stock holders. A company can only pay dividend when it makes profit. A company may not pay dividend even when it makes profit because payment of dividend at the discretion of board of directors. Dividends on common stocks are not fixed.

Payment of dividend to preferred stock holders is fixed because preferred stocks are fixed income securities. Dividend in this case does not depend on the financial fortune of a company. In case of cummulative preferred stocks, arrears of dividend in a given year can be carried forward to another year.

Franklin Inc is under a legal obligation to pay interest to debenture holders because the company is under bond to pay principal and interest as and when due. Bonds are also fixed income securities in which interest is fixed regardless of whether the company makes profit or not.

2. Rob Lowe is advised to invest in bonds because he is guaranteed of his principal and interest as and when due since the interest on bond and principal do not depend on the financial fortune of the company.

Explanation:

In the first case, explanations were made on the obligation of the company to pay dividend or interest.

In the second case, explanations were provided on the appropriate investment to undertake.

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The​ short-run aggregate supply curve slopes upward because of all of the following reasons except
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Answer:

B) in the short run, an unexpected change in the price of an important resource can change the cost to firms.

Explanation:

The short run aggregate supply (SRAS) curve is upward sloping because as the price of goods and services increases, the quantity supplied will increase. In the short run, wages are more sticky than prices, and businesses can adjust prices more rapidly than employees can get a raise. This will result in businesses increasing their profit margins as the general level of prices increases, therefore the SRAS curve will be upward sloping.

An unexpected change in the price of a key input will shift the entire SRAS curve either to the right (price of key input decreases) or to the left (price of key input increases).

3 0
3 years ago
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A company's Office Supplies account shows a beginning balance of $630 and an ending balance of $460. If office supplies expense
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The correct answer is that there was $3,080 worth of office supplies purchased during the period.

In order to answer this question you know that the company started with $630 worth of office supplies and ended the year with $460 worth, or $170 less than they started with. The company used $170 of supplies from inventory, so they needed to purchase another $3,080 in order arrive at the $3,250 that we know was the total expense during the reporting period.

5 0
3 years ago
Emma just graduated from college and needs to start an emergency fund. Where should she put her money? Why?
svetoff [14.1K]

Answer:

These steps can help you when building an emergency fund in college:

Set a goal for how much you need.

Consider your total monthly income and expenses.

Determine what expenses are necessary.

Decide how much you're going to save every month.

Consider how you're going to get what you need.

Explanation:

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7 0
2 years ago
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John, a line supervisor, has decided to increase Kerry's responsibilities by delegating more work to her station. what is the fi
melomori [17]
<h2>Clarify the assignment would be the first step john should take to increase Kerry's responsibilities.</h2>

Explanation:

Option A: If a new work is assigned or an additional work is assigned, it is necessary to first explain about the new responsibility and clarify about the assignment. This would ensure Kerry to continue the work smoothly.

Option B: Feedback is always welcome but this is not the first step to add responsibilities.

Option C: Notifying others is the responsibility of John and not Kerry. So this choice is invalid.

Option D: Accountability though it is mandatory comes only in the closure part.

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3 years ago
True or false: Partnerships are less likely to survive than sole proprietorships. True false question.
Irina-Kira [14]

Answer:

true

Explanation:

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