payment = $3/share = 3*591‚833 = $1‚775‚499 Remaining (i.e. Bonds payable) = $9‚765‚244 Dr Common Stock‚ no par value $11‚541 (10% of CS @$19.5/share) Cr Bonds payable $9‚765 (plug) Cr Cash $1‚776 ($3/share * 597.0298 thousand shares) Note that the $9765 includes the discount applied to the face value of the bond. The value of this discount is $9‚765*6.5/23 = $2‚760‚ Face value = $7‚005 The following table (TABLE 1) shows the bond repayment schedule. 3. The earnings per share from
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1. An agency problem is prone to exist in public corporations because: E. management is frequently separated from ownership.2. Larson‚ Inc. has total assets of $248‚000 and an equity multiplier of 2.5. What is the debt-equity ratio? E. 1.5 3. Kate wants to invest $1‚000 for five years. Which one of the following will provide her with the largest future value? B. 7 percent interest‚ compounded monthly 5. Hilltop‚ Inc. earns $.12 in profit on every $1 of sales. The firm pays out 55 percent of its profits
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The term structure of interest rates‚ also known as the yield curve‚ is a very common bond valuation method. Constructed by graphing the yield to maturities and the respective maturity dates of benchmark fixed-income securities‚ the yield curve is a measure of the market’s expectations of future interest rates given the current market conditions. Treasuries‚ issued by the federal government‚ are considered risk-free‚ and as such‚ their yields are often used as the benchmarks for fixed-income securities
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CHAPTER 19—BOND PORTFOLIO MANAGEMENT STRATEGIES MULTIPLE CHOICE 1. Which of the following is a passive bond portfolio strategy? a. Indexing b. Buy-and-Hold c. Classical immunization d. Choices a and b e. None of the above ANS: D PTS: 1 OBJ: Multiple Choice 3. Which of the following is a matched funding technique? a. Classical immunization b. Contingent immunization c. Bond swaps d. Valuation analysis e. Interest rate anticipation ANS: A PTS: 1 OBJ: Multiple Choice 5. Junk bonds are high yield
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first picture shows a little girl asking her dad to but her a war bond. It trying to imply that every family should go out a get a war bond. That little girl is trying to imply to the world that that buying a war bond is a cute or necessary in order to keep a little girl happy. A father never wants to see his little girl cry so he usually gets her what she wants. The government is trying to imply that everyone has to buy a war bond in order to help the little girl (U.S) in order for it to be happy
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$1‚780‚ his federal income tax withholding was $301.63‚ and his FICA total was $135.73. Exercise E10-10 On January 1‚ Neuer Company issued $500‚000‚ 10%‚ 10-year bonds at par. Interest is payable semiannually on July 1 and January 1 Exercise E10-11 On January 1‚ Flory Company issued $300‚000‚ 8%‚ 5-year bonds at face value. Interest is payable semiannually on July 1 and January 1 Exercise E10-15 Leoni Co. receives $240‚000 when it issues a $240‚000‚ 10%‚ mortgage note
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negotiable CD’s‚ money market funds and Eurodollar deposits. Capital Markets: The markets for long-term debt (corporate‚ state‚ local and federal government) and corporate stock (common and preferred). U.S. Treasury notes and bonds‚ municipal bonds‚ mortgages‚ corporate bonds‚ preferred stock and common stock. Primary Markets: The first buyer of a newly issued security buys that security in the primary market. All subsequent trading of those securities is done in the secondary
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Advantages 1. Gap Management In general‚ banks and other financial intermediaries have longer durations of assets than liabilities. This duration mismatch exposes them to interest rate risk whenever rates are volatile. Specifically‚ if the duration of a bank’s assets is longer than its liabilities‚ rising interest rates will reduce the net worth of the bank and could threaten its capital adequacy position. One obvious way to manage this duration mismatch is for the bank to either lengthen the duration
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References: review vol. 19 (2010) nr. 4 Ashbaugh‚ H.‚ R Brandon‚ D. M.‚ Crabtree‚ A. D. and Maher‚ J. J. (2004) Non-audit fees‚ auditor independence‚ and bond ratings‚ Auditing: A Journal of Practice & Theory‚ 23 Chee W. Chow. 1982. The Demand for External Auditing: Size‚ Debt and Ownership Influences Accounting Association vol. 87 (2012) nr. 1 DeAngelo‚ L Dhaliwal‚ D.‚ Gleason‚ C. A.‚ Heitzman‚ S. and Melendrez
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1 ECS209-J Oct/Nov 2008 This paper consists of xx pages plus instructions for the completion of a mark reading sheet. The formulas that you should use appear on page xx. SECTION A - ESSAY QUESTIONS Answer any TWO of the following three questions. Each question carries 25 marks. Section A therefore counts 50 marks. IMPORTANT: Please write on both sides of each page QUESTION 1 (a) Lenders and borrowers are seldom able to do a direct deal because of a clash of interests. How do financial intermediaries
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