Answer:
Bondholders have a degree of legal protection against default risk, but it is not comprehensive.
Explanation:
A bond can be defined as a debt or fixed investment security, in which a bondholder (investor or creditor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time. The bond issuer are expected to return the principal (face value) at maturity with an agreed upon interest (coupon), which are paid at fixed intervals.
The par value of a bond is its face value and it comprises of its total dollar amount as well as its maturity value. Also, the par value of a bond gives the basis on which periodic interest is paid. Thus, a bond is issued at par value when the market rate of interest is the same as the contract rate of interest. This simply means that, a bond would be issued at par (face) value when the bond's stated rated is significantly equal to the effective or market interest rate on the specific date it was issued.
In Economics, bonds could either be issued at discount or premium. A bond that is being issued at a discount has its stated rate lower than the market interest rate, on the specific date of issuance while a bond that is issued at a premium, has its stated rate higher than the market interest rate on the specific date of issuance.
Default risk in bonds refer to the risk that a bond issuer (borrower) is unable to pay the principal or interest agreed upon in the contract with the bondholder (lender) in a timely manner.
Hence, the true statement about default risk is that bondholders have a degree of legal protection against default risk, but it is not comprehensive.
Answer: The correct answer is "C. produce because revenue of $1 comma 000 is greater than fixed costs.".
Explanation: The firm should produce because the revenue of 1000 is enough to cover the fixed costs and part of the variables (1000 - 800 - 600 = (-400)) so that the loss is less than if it stopped producing despite the avoidable costs (800 - 350 = 450) since if it stopped producing it would have a loss of $ 450 and producing it would have a loss of $ 400.
Answer:
Explanation:
The journal entry is shown below:
Interest expense A/c Dr $3,000
To Interest payable A/c $3,000
(Being interest is recorded)
The computation of the interest expense is shown below:
= Principal × rate of interest × number of months ÷ total number of months in a year
= $125,000 × 6% × (4 months ÷ 12 months)
= $2,500
The four-month is calculated from the September 1 to December 31
Answer:
d. both countries, as whole, will be better off.
Explanation:
When countries leverage on their comparative advantages, they will be better off. In this instance as US has comparative advantage in producing airplanes, it will be more cost effective for them to produce and export to Japan.
So also Japan will find it cheaper to produce televisions and export to the US. Both contries reduce cost by producing goods they have comparative advantage in.
At the end of given period the gross profit method is required to estimate inventory.The valuation become invalid when the following are not available.the value for the beginning of inventory,records of purchase made, the total sale during the period and the gross profit margin.
