?An increase in interest rates will increase the future value of a portfolio because the cash flows produced by the portfolio:
A. will increase the maturity value of the bond.?
B. ?can be reinvested at higher rates of return.
C. ?can be used to recall high-rate bonds.
D. ?will generate cash to pay future coupon interest.
E. ?will decrease the yield to maturity of the bond.
Answer: B
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The Beaver Study indicated the following ratio (ratios) to be the best for forecasting financial failure:
a. cash flow/total debt. b. net income/total assets. c. total debt/total assets. d. cash flow/total debt and net income/total assets. e. all of the answers are correct.
In an outsourcing decision, rent received from an outside party for facility use is a relevant cash inflow
Indicate whether the statement is true or false
On January 1, Year 4, Jones Realty Company issued 8 percent term bonds with a face amount of $1 million due January 1, Year 14 . Interest is payable semi-annually on January 1 and July 1 . On the date of issue, investors were willing to accept an effective interest rate of 6 percent. Assume the bonds were issued on January 1, Year 4 . for $1,148,959 . Using the effective interest amortization
method, Jones Realty Company recorded interest expense for the six months ended June 30, Year 4, in the amount of a. $40,000 b. $80,000 c. $68,938 d. $34,469 e. none of the above
On September 1, Ziegler Corporation had 50,000 shares of $5 par value common stock, and $1,500,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:
A. Debit Retained Earnings $750,000; credit Common Stock $750,000. B. Debit Retained Earnings $250,000; credit Stock Split Payable $250,000. C. Debit Retained Earnings $250,000; credit Common Stock $250,000. D. Debit Retained Earnings $750,000; credit Common Stock Split Distributable $750,000. E. No entry is made for this transaction.