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malfutka [58]
3 years ago
9

Suppose recent regulatory reforms relating to credit rating agencies are perceived to improve the reliability and accuracy of cr

edit ratings of corporate bonds. Imagine further that you manage a corporation interested in issuing new bonds, in addition to past issues by the firm that already trade in the market. Identify one way in which your firm might lose and one way in which it might gain from these regulatory reforms. Explain.
Business
1 answer:
damaskus [11]3 years ago
5 0

Answer:

If the new reforms bring increase confidence of the investors then the company will have to incur lower borrowing costs as the investor will be available and vice versa.

Explanation:

Suppose that previously our company's credit rating was overrated. Due to recent regulatory reforms, my company achieved a lower credit rating and hence the investor confidence in our company dropped significantly. Now the investor is not interested to invest in my company and to urge them to invest in the company, they will be offered higher interest. If the reforms are going to impact our credit rating adversely then the borrowing cost will increase and vice versa.

Furthermore, Core Principle 3 says that the decsion making of the investor is based on the information that is readily available to him. This means if the reforms increase the access of the borrower through improved credit rating then it will be favourable for the company in terms of lower borrowing costs. If the reforms decrease the access of the borrower through depreciating credit rating then it will adversely affect the company in terms of lower borrowing costs and lower investment access.

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In the for-profit business world, decisions to spend money must pass a "cost versus benefit" test, but for nonprofit arts organi
Zinaida [17]

The cost versus benefit test will not act as a good factor to measure tangible achievement.      

Explanation:

Most of the Non-profit organization has a focus on welfare activities. The benefits can be influenced only by the subjective fulfillment of benefits. Executive members of all trusts are not able to calculate the benefits attained through welfare operations. Such a parameter system of identifying the beneficiaries' prospects of end-users is known as Intangible achievement.

The tangible achievement always lies in the status of invisible movements of each welfare operations. But each step of inducing the effects of cost versus benefit test does not suit to provide the effective to identify the tangible achievements.  

3 0
3 years ago
Michigan Cranberry Company sold $10 million worth of cranberries it produced. In producing cranberries, it purchased $1 million
rusak2 [61]

Answer:

The answer is: $9 million

Explanation:

The gross domestic product includes all the final and legal goods and services produced in an economy during one year.

Michigan Cranberry produced $10 million worth of cranberries, but in doing so, it imported $1 million worth of supplies from other countries. Cross border labor is included in the GDP.

The net addition of Michigan Cranberries to the US GDP is: $10 million - $1 million (imported supplies) = $9 million

8 0
3 years ago
The corporate charter of Alpaca Co. authorized the issuance of 10 million, $1 par common shares. During 2021, its first year of
xz_007 [3.2K]

Answer:

Alpaca Co.

The amount that Alpaca should report as additional paid-in capital, in excess of par, in its December 31, 2021 balance sheet is:

= $116 million

Explanation:

a) Data and Calculations:

Authorized share capital = 10 million, $1 par common shares

Transactions during the year:

Date         Number of shares issued    Price    Common Stock  Additional

January 1 sold 8 million shares at         $15     $8 million           $112 million

June 3 retired 2 million shares at         $18      (2 million)            (34 million)

December 28 sold 2 million shares    $20       2 million              38 million

Total                                                                 $10 million           $116 million

b) Additional paid-in capital represents the excess capital that is received above the par value of the shares issued.  When the retired shares (treasury stock) are accounted for using the cash method, the additional capital is stated less the treasury stock's excess issue value.  When the par value method is used, a treasury stock account is created separately so that the two adjustments to the treasury stock account are reflected differently.

3 0
3 years ago
News sources are helpful for generating ideas for topics tied to current events. True False
Pavel [41]

Answer:

The answer is True.

Explanation:

All people want is new ideas something they havent seen before.

7 0
2 years ago
ou have just read an explanation of the figures you studying as the total dollar value of final goods and services produced with
Shalnov [3]

Answer:

REAL GDP

Explanation:

GDP typically used as a variable to measure a nation's economic strength within a certain time period. But often time, the value of GDP is a little bit jaded. If the inflation is high, an increase in GDP doesn't really mean that the country become more productive.

This is why there are many experts prefers to use REAL GDP as a more accurate unit to measure the economic strength.

7 0
3 years ago
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