Define flotation costs and explain how they are used when estimating a firm's yield-to-maturity
What will be an ideal response?
Answer: Flotation costs are the costs incurred to sell a security. They are the fees charged by the investment banker to facilitate the issuance and sale of the bond. To determine the yield-to-maturity of a new issue of bonds, it is proper to use the bond selling price less the flotation cost as the net proceeds to the firm. The net proceeds become the price used in the equation to determine the yield-to-maturity.
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On September 12, Vander Company sold merchandise in the amount of $5,800 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Jepson uses the periodic inventory system and the gross method of accounting for purchases. Jepson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Jepson makes on September 18 is:
A.
| Accounts payable | 5,800 | |
| Purchases discounts | 116 | |
| Cash | 5,684 |
B.
| Cash | 5,684 | |
| Accounts receivable | 5,684 |
C.
| Purchases | 5,684 | |
| Cash | 5,684 |
D.
| Accounts payable | 5,800 | |
| Merchandise inventory | 116 | |
| Cash | 5,684 |
E.
| Cash | 5,684 | |
| Purchases discounts | 116 | |
| Accounts payable | 5,800 |
A __________ style of conflict management is one in which the concerns and the position of the opposition are completely ignored.
a. Acclimation b. Collaboration c. Competition d. Accommodation
A bearer instrument is negotiated by delivery alone
Indicate whether the statement is true or false
Which of the following is a measure of variability?
a. Percentiles b. Quartiles c. Interquartile range d. Geometric mean