Answer:
The answer is C. An unsecured bond - not legally tied to any of the firm’s assets
Explanation:
Debenture is an unsecured bond(long-term debt). It is not backed by any collateral but backed only by the creditworthiness(credit rating) and reputation of the issuer.
For issuing firm, debentures gives the benefit of not collecting collaterals.
For bondholders(creditors of the company), debentures are risky because it is not a secured bond, credit risk of the issuer is of great concern. Since it is unsecured, its yield is usually higher than secured bonds.
$2,500 interest is paid to the bondholders by the company.
<h3>
What are bonds?</h3>
- A bond is a sort of security used in finance where the issuer owes the holder debt and is required, depending on the terms, to repay the principal and interest on the bond at the maturity date.
- Interest is often paid at regular intervals.
<h3>What are interests?</h3>
- According to economics, interest is the income obtained from lending a certain amount of money.
- The amount earned is sometimes expressed as a percentage of the amount lent; this proportion is referred to as the interest rate.
<h3>Solution -</h3>
To find interest company pays to bondholders:
At par, bonds are sold. Interest is paid every half a year (2 times a year) Interest equals Par Value/10.
25,000/10 = 2,500
Therefore, $2,500 interest is paid to the bondholders by the company.
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Given:
nominal interest rate 7%
real interest rate 4%
end of the year CPI is 198.30
beginning of the year CPI?
nominal rate - real interest rate = 7% - 4% = 3%
end of the year CPI is the result of the beginning of the year CPI which increased by the difference in percentage of the nominal rate and real interest rate.
end of the year CPI = beginning of the year CPI * (1 + difference of nominal and real interest rate)
198.30 = beginning of the year CPI * (1+0.03)
198.30 / 1.03 = beginning of the year CPI
192.52 = beginning of the year CPI
The consumer price index (CPI) at the beginning of the year is 192.52
Answer:
-$720 unfavorable
Explanation:
The computation of the material quantity variance is shown below:
= Standard Price × (Standard Quantity - Actual Quantity)
= $18 per pound × (610 pounds - 650 pounds)
= $18 per pound × -40 pounds
= -$720 unfavorable
Simply we take the difference between the standard quantity and the actual quantity and then multiply it by the standard price so that the correct value can come