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 and Explanation:
The identification is as follows:
As we know that
M! money supply involved all the currecies that have physical existance i.e. notes, coins, demand deposits etc
While on the other hand, M2 involves M1 + near money i.e. mutual funds, checking deposits, money market etc
Since Susan has 2 year CD so it would be classified as a M2 money supply
Since larry withdraw from the bank so it would be included in M1 and M2
And, since raphael has $25,000 in money market so would be classified as a M2 money supply
Answer:To allocate scarce goods and resources, a market economy uses non-price rationing preferential treatment price rationing . this means that individuals will get the goods and services if they have the ability to pay meet the government's requirements stand in line at the store.
Explanation: hope this helps u! (:
Answer:
Location 1
Payback period
= Cash outflow/Cash inflow
= $255,000/$51,000
5 years
Location 2
Year Cashflow Cumulative cashflow
$ $
0 (255,000) (255,000)
1 82,000 (173,000)
2 61,000 (112,000)
3 41,000 (71,000)
4 33,000 (38,000)
5 20,000 (18,000)
6 18,000 0
7 89,000
8 64,000
Payback period = 6 years
Explanation:
In location 1, we will divide the initial outlay by the annual cash inflows in order to obtain the payback period since the cash inflows are constant
In location 2, we deduct the initial outlay from the cashflow for each year until the cash inflow is fully recovered.
Answer:
$55,000
Explanation:
The computation of the payment of dividend during the year is shown below:
Payment of dividend = Opening balance of cash dividend payable + declared cash dividend - ending balance of cash dividend payable
= $20,000 + $60,000 - $25,000
= $55,000
By applying the above formula we can easily find out the payment of dividend