Question 8

The ________ market is where securities are initially issued and the ________ market is where pre-owned securities (not new issu

Lubov Fominskaja [6]

Answer: Option(a) is correct.

Explanation:

Correct option: Primary; secondary

Primary market is a market in which new stocks and securities are issued for the first time. Firms are selling their shares and bonds for the first time to the public. For example; IPO (Initial Public Offering).

Secondary market is a market in which buying and selling of already owned securities takes place. In this type of market investors trade with each other rather than with issuing firm.

4 0

3 years ago

g The Nelson Company has $1,312,500 in current assets and $525,000 in current liabilities. Its initial inventory level is $385,0

slavikrds [6]

Answer:

$262,500

Explanation:

Current ratio = Current asset/Current liabilities

In line with the current ratio formula, to calculate the amount of short term debt increase, with the amount of current assets and current liabilities, we must add an amount such that the result 2.0

(1,312,500 + x) / (525,000 + x) = 2.0

Cross multiply

(1,312,500 + x) = 2.0 × (525,000 + x)

Open the brackets

1,312,500 + x = 1,050,000 + 2x

Collect like terms

1,312,500 - 1,050,000 = 2x - x

262,500 = x

It therefore means that the maximum that should be borrowed to buy inventory is $262,500

3 0

3 years ago

The Winter Wear Company has expected earnings before interest and taxes of $3,800, an unlevered cost of capital of 15.4 percent

sleet_krkn [62]

Answer:

The value of the firm is $16,949

Explanation:

Value of the firm is the firm's economic value at a particular time. Winter Wear Company's value will be calculated by:

= $\frac{EBIT(1-tax rate)}{Unlevered Cost of Capital}$ + (Tax rate * Debt) =

Here given are,

EBIT = $3,800

Tax Rate = 35%

Unlevered Cost of Capital = 15.4%

Debt = $2,600

= $\frac{3,800(0.65)}{0.154}$ + (0.35 x $2,600)

= $16,039 + $ 910

= $16,949

7 0

3 years ago

Sarasota Corporation issued 2,200 shares of $10 par value common stock upon conversion of 1,100 shares of $50 par value preferre

just olya [345]

Answer:

Journal entry

Explanation:

The journal entry is as follows

Preferred Stock $55,000 (1,100 shares × $50)

Paid in capital Preferred Stock $15,400 {1,100 shares × ($64 - $50)}

To Common Stock $22,000 (2,200 shares × $10)

To Paid in capital common stock Additional $48,400

(Being the conversion of the preferred stock is recorded

7 0

3 years ago

Company A has 279,000 basic shares outstanding and 26,000 outstanding options and warrants. The exercise price of these options

lesya [120]

Answer:

c. 342,000

Explanation:

Missing question and Multiple Option " & if-converted methods? 305,000, 292,000, 342,000, 345,333"

Proceeds expected if option are exercised = No of outstanding options and warrants * Per share exercise price

Proceeds expected if option are exercised = 26,000 * $3.75

Proceeds expected if option are exercised = $97,500

Number of treasury shares expected to be purchased = Proceeds expected if option are exercised / Average market price per share

Number of treasury shares expected to be purchased = $97,500 / $7.50

Number of treasury shares expected to be purchased = $13,000

Number of new shares issued if conversion is effected = Amount of convertible bonds reported / Effective conversion price per share

Number of new shares issued if conversion is effected = $200,000 / $4

Number of new shares issued if conversion is effected = 50,000

Calculation of the Diluted Share Outstanding

Number of basic shares outstanding 279,000

Add: Number of new shares through options 26,000

Add: Number of new shares through conversion issued 50,000

Less: Number of treasury shares to be purchased (13,000)

Diluted Share Outstanding 342,000

8 0

3 years ago