Answer:
(a) The Vasquez construction is the principal, the surety is the party that underwrites the contract and local school board is the obligee.
(b) If Vasquez fails to finish the contract, then the surety will be required to pay for the loss suffered by the obligee due to the contract failure.
(c) In a surety bonds contract, the surety has a legal right to get back the losses from the principal.
Explanation:
Solution:
(a) Under a performance bond contract, the owners assures that the work will be completed within a specific time frame and contract specification.
In this example given, the Vasquez construction is the principal, the surety is the party that underwrites the contract and local school board is the obligee.
(b) If the Vasquez construction fails to complete or finish the contract, then the surety will be obliged to pay for the loss suffered by the obligee due to the failure of the contract.
(c) In a surety bond contract, the surety has a legal right to recover the losses from the principal. for this later on, the surety can recover it's loss from the principal.
Answer:
the essential terms of the contract.
Explanation:
Generally contracts that involve large transactions like selling a company must be made in writing and must be signed by all the parties. In this case, the sort of wrote a summary of the basic terms of the sale on the back of an invoice, and at least they signed it. As it is, the contract might not be enforceable because it probably lacks a lot of important details, since the amount of space used to write it down was very small specially considering that most of the space was used for the signatures.
So in order to prevent any future problems, and to comply with the statute of frauds, they should make a written memorandum that includes the essential and important terms of the contract, which must be signed also. They could also write down a proper sales contract since they are signing it again.
The statute of frauds establishes that certain contracts must be done in writing, and since this contract probably involves a significant amount of money, it probably falls under it.
Answer:
$9,000
Explanation:
The computation of the amount of the discount on the bonds at issuance is shown below:
= Par value of the bond - issued price of the bond
= $400,000 - $391,000
= $9,000
By deducting the issued price of the bond from the par value of the bond we can get the discount amount on issuance of the bond and the same is applied above
Answer:
As the knock-in was reach, it will receive the original investment plus the coupon yield: 1,060
Explanation:
<u>At maturity</u>
Because the knock-in was achieved, the customer can pick to recieve stock or cash
when the contract was made, the stock price was 50 so 1,000 are equivalent to:
1,000 / 50 = 20 shares
we multiply this by the market price.
20 x 25 = 500
between 500 in stocks and 1,000 in cash it will prefer 1,000
Then, the interest will be:
1,000 x 6% = 60
Bond valuation:
<span>Par value = Maturity value = FV = $1,000 </span>
<span>Coupon rate = 7.5% </span>
<span>Years to maturity = N = 19 </span>
<span>Required rate = I/YR = 5.5% </span>
<span>(Coupon rate)(Par value) = PMT = $75 </span>
<span>PV = $1,232.15</span>
