Green Roof Inns is preparing a bond offering with a 6 percent, semiannual coupon and a face value of $1,000. The bonds will be repaid in 10 years and will be sold at par.-The correct statement is -<u>The bonds will sell at a premium if the market rate is 5.5</u>
Explanation:
The important point to be noted from the given question is that the bond is offered when the market rate is 6 percent.
So ,the bonds are said to selling at premium since the market rate has reduced from 6% to 5.5%
In this case it is right to say that -Green Roof Inns is preparing a bond offering with a 6 percent, semiannual coupon and a face value of $1,000. The bonds will be repaid in 10 years and will be sold at par.-The correct statement is -<u>The bonds will sell at a premium if the market rate is 5.5</u>
Answer:
$2 or 7.84%
Explanation:
we need to determine the expected value of the firm's payments:
- $35 x 50% chance of doing well = $17.50
- $20 x 50% chance of doing poorly = $10
- total expected value = $27.50
Since investors are willing to pay $25.50 and the expected value in one year is $27.50, the promised return = $27.50 - $25.50 = $2 or 7.84% (= $2 / $25.50)
Answer: A firm may operate in multiple industries.
Different firms may use different accounting practices.
Explanation:
Ratio Analysis as you probably know is a very useful tool in financial analysis. It works by comparing ratios based on items in the financial statements of a company to measure certain things such as the Company's Liquidity, Profitability and the like.
It does have certain drawbacks though such as,
A firm may operate in multiple industries
When a firm is operating in multiple industries. Comparing ratios is not a simple task. Different industries record profits and costs differently and just because a ratio is held in high esteem on one company does not mean it is good in another thereby making comparison based on ratios alone quite cumbersome.
Different firms may use different accounting practices
Now if different companies use different Accounting practices, you might find that ratios cannot be straightforwardly compared because different types of figures were used by the different companies. For instance, some companies might use a Straight Line Depreciation method as opposed to a Reducing Balance method which will have varying effects on income.
$ 60000
Here I will the calculations for the four options. You will be able to tell the which is the highest earnings
a.
Straight commission of 6% on all sales.
6% * 60,000 = 6*60,000/100 = 3,600
b.
Monthly salary of $1,500 plus 3% commission on all sales.
1,500 + 3%*60,000 = 1500 + 3*60,000/100 = 1,500 + 1,800 = 3,300
c.
Graduated commission of 4% on the first $50,000 in sales and 10% on anything over that.
4%*50,000 + 10%*[60,000 - 50,000] = 4*50,000/100 + 10*10,000/100 = 2,000 + 1,000 = 3,000
d.
Graduated commission of 5% on the first $40,000 in sales and 9% on anything over that.
4%*40,000 + 9%*[60,000 - 40,000] = 1,600 + 1,800 = 3,400
Answer:
i) valid
Explanation:
The research only included car owners (and their cars) that suspected that auto repair shops had not done their job properly. The 42% of fraud rate is applicable to that specific population which is car owners that suspect auto repair shops have committed fraud. It is not representative of the general population of all the car owners whose cars have been repaired.
It is like making a research in a university campus and saying that 99% of the US population buys college books. Maybe 99% (or even 100%) of all college students buy college books, but the rest of the population doesn't and they do not have a reason to do so either.
