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3 years ago

Under what circumstances would a firm be more likely to buy the required number of bonds

1 answer:

3 0

It happens when a firm has a bond that would reach its maturity. It enters a "sinking fund" which is a way to pay it before it does. In this situation, it is required to have a number of bonds and catch up with the bond that is due to mature. Bonds in a sinking fund also offers lower interest rates for the firm and now makes the owner sell it to other investors. This way a firm can avoid financial problems in the future.

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When one party to a transaction has incentives to engage in activities detrimental to the other party, there exists a problem of

Juli2301 [7.4K]

Answer: Moral hazard

Explanation: As per economic principles, if an individual increases the exposure to risk when covered by insurance, moral hazard happens, particularly when an individual takes further risks just because someone carries the burden of all those consequences.

There can be a moral hazard at which one party's policies may modify to the disadvantage of someone else after a business transaction has occurred. Moral hazard may arise through a type of asymmetric information in which the threat-taking group to trade is more aware of its motives than the person bearing the risk's implications.

Thus, from the above we can conclude that the correct option is A .

5 0

3 years ago

Carol wants to invest money in a 6% CD account that compounds semiannually. Carol would like the account to have a balance of $5

mash [69]

Answer:

PV= $37,204.70

Explanation:

Giving the following information:

Interest rate= 6% compounded semiannually= 0.03

Future value= $50,000

Number of periods= 5*2= 10

To calculate the initial investment to reach the objective, we need to use the following formula:

PV= FV/(1+i)^n

PV= 50,000/(1.03^10)

PV= $37,204.70

8 0

3 years ago

Which of the following best describes vertical integration? A. sell products to a supplier or a distributor B. develop the abili

jasenka [17]

Answer: B

Explanation:

A vertical integration is where a company owns another company in the same production line.

For example a company that bakes bread has a farm where wheat is cultivated, a marketing company and retail locations for the sale of the bread.

The advantages of Vertical integration include:

a. It reduces costs.

b. It increases efficiency.

c. It gives the firm greater control of the production process.

A major disadvantage of vertical integration is it requires huge capital outlay.

7 0

3 years ago

Use the starting balance sheet and the list of changes to create an updated balance sheet and to answer the question.

anastassius [24]

Answer: $3,300,000

Explanation:

Accounting formula:

Assets = Equity + Liabilities

Total equity and liabilities on March 31 is:

= Beginning balance - decrease in liabilities + Increase in Equity

= 5,000,000 - 100,000 + 400,000

= $5,300,000

Assets therefore has to be $5,300,000 on the same date.

Assets = New cash balance + Other assets

5,300,000 = (2,200,000 - 200,000) + Other assets

Other assets = 5,300,000 - 2,000,000

= $3,300,000

4 0

3 years ago

What are the criteria for distinguishing between a deductible expense and a capital expenditure?

Lelu [443]

The criteria for distinguishing between whether an expenditure is a capital item or a deductible expense is the useful life of the item.

If the purchase is going to be used and no longer have value at the end of the reporting period it is an expense for that period. If the item is a capital item it is going to have a longer useful life. In this case the item is depreciated over its useful life, assigning an expense amount to each accounting period that the item has value.

6 0

3 years ago