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3 years ago

Which bond would you expect to pay the highest interest rate?

Business

1 answer:

UNO [17]3 years ago

4 0

Answer:

The bond that should pay the highest interest rate is:

d. a bond issued by a new restaurant chain.

Explanation:

This is based on the fact that the new restaurant chain is untested, has higher risk profile and the bondholders are assuming higher risks, and the bond cannot be compared to the bonds issued by the US government, New York State, and General Motors, in that order. The new restaurant chain will be offering a higher rate of return than others because it is new to the bond market and would like to attract potential bond investors. Without the higher rate, therefore, it will not be successful in the bond issuance.

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Four possibilities are equally likely and have payoffs of $2, $4, $6, and $10. The expected value is:

ki77a [65]

Answer:

Expected value is 5.5

Explanation:

Expected value = sum of X*P(x)

= 1/4*2 + 1/4*4 + 1/4*6 + 1/4*10

= 0.5 + 1.0 + 1.5 + 2 .5

= 5.5

6 0

4 years ago

Diversified Semiconductors sells perishable electronic components. Some must be shipped and stored in reusable protective contai

Dennis_Churaev [7]

Answer:

a. Dr Cash $948,000

Cr Liability for refundable deposits $948,000

b. Dr Liability for refundable deposits $873,000

Cr Cash $873,000

c. Dr Liability for refundable deposits $42,750

Cr Sale of containers $42,750

d. Dr Cost of goods sold $42,750

Cr Inventory of containers $42,750

2. $655,250

Explanation:

1. Preparation of Journal entries

Based on the information given we were told that the deposits collected on containers that were shipped was the amount of $948,000 which means that the Journal entry will be:

a. Dr Cash $948,000

Cr Liability for refundable deposits $948,000

b. Based on the information given we were told that the amount of $873,000 was refunded which means that the Journal entry will be :

Dr Liability for refundable deposits $873,000

Cr Cash $873,000

c. Based on the information given we were told that the deposits forfeited were the amount of $42,750 which means that the Journal entry will be :

Dr Liability for refundable deposits $42,750

Cr Sale of containers $42,750

Dr Cost of goods sold $42,750

Cr Inventory of containers $42,750

2. Calculation to Determine the liability for refundable deposits to be reported on the December 31, 2021, balance sheet.

Liability for refundable deposits, January 1, 2021 $623,000

Add: Deposits received during 2021 $948,000

Less: Deposits returned during 2021 ($873,000)

Less:Deposits forfeited during 2021 ($42,750)

Balance, December 31, 2021 $655,250

Therefore the liability for refundable deposits to be reported on the December 31, 2021, balance sheet will be $655,250

4 0

3 years ago

Why are hedge funds considered a high-risk form of investment?

emmainna [20.7K]

Answer:B

Explanation:

Took the test

5 0

3 years ago

Read 2 more answers

Home & More is considering a project with cash flows of −$368,000, $133,500, −$35,600, $244,700, and $258,000 for Years 0 to

n200080 [17]

Answer:

Modified Internal Rate of Return (MIRR) is higher than the discount rate. Therefore, this offer should be accepted.

Explanation:

Find the given attachment

6 0

3 years ago

Your investment has a 20% chance of earning a 30% rate of return, a 50% chance of earning a 10% rate of return, and a 30% chance

stellarik [79]

Answer:

9.2%

Explanation:

expected return of the investment = potential return x chance of each return happening

Expected return of the investment:

20% chance of occurring x 30% potential return = 0.2 x 30% = 6%
50% chance of occurring x 10% potential return = 0.5 x 10% = 5%

30% chance of occurring x -6% potential return = 0.3 x -6% = -1.8%
total expected return = 9.2%

6 0

3 years ago