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What is a market interest rate?
The market interest rate is the rate of interest on cash deposits or loan which is determined by the market. Factors such as demand and supply of cash in the market
How can bonds issued by two companies paying same contractual interest rate be issued at different prices?
To calculate present value of the bond you also need to know market interest rate. If , for example these companies were issuing their bonds in the different time and market interest rate was different then bond could be sold at premium(the bond will cost more then its face value), par (same as face value), and discount (bond will cost less then face value.)
Is the price at which bonds sell determined by the interaction of stated rates of interest and market rates of interest?
Yes, the price at which bonds sell are determined by the interaction of stated rates of interest and market rates of interest.
What occurs when a bonds stated interest rate is less than the market interest rate?
Since the current market interest rate is higher, it is more attractive to a new investor then the bond with a lower interest rate. Thus, the price of the lower interest rate bond has to decline to be competitive with new bonds in the market.
Each time securities are traded on the secondary market the issuing corporation receives of the selling price?
No. When securities are traded the issuing corporation receives nothing. The broker enabling the trade receives a fee. That is it. The issuing corporation only gets its money when it issues its stock at the initial offering.
What is the carrying value of a long term note payable?
Is computed as the future value of all remaining future payments, using the market rate of interest.
What happens if write a bounced check to marsh super market?
Marsh super market will sue you. You may be jailed for issuing a check without sufficient balance in your account.
What is the solution to P14-6 intermediate accounting 12th edition?
At January 1, 2011, Brant Cargo acquired equipment by issuing a five-year, $150,000 (payable at maturity), 4% note. The market rate of interest for notes of similar risk is 10%. Required: 1. Prepare the journal entry for Brant Cargo to record the purchase of the equipment. 2. Prepare the journal entry for Brant Cargo to record the interest at December 31, 2011. 3. Prepare the journal entry for Brant Cargo to record the interest at December 31, 2012.
What is a market interest rate?
The market interest rate is the rate of interest on cash deposits or loan which is determined by the market. Factors such as demand and supply of cash in the market
What percent securities are traded on the secondary market the issuing corporation receives of the selling price?
is it fifty percent that the issuing corporation receives of the selling price when the time securities are traded on the secondary market?
Advantages and disadvantages of issuing bond?
You don't loose any control of your company like a share issue The bond coupon or interest payment is tax deductible expense You get a fixed rate of interest and not subject to Market fluctuations Disadvantage They Carry a higher interest rate They are not suitable for small loan amount due to the high fixed cost of issue them
How can bonds issued by two companies paying same contractual interest rate be issued at different prices?
To calculate present value of the bond you also need to know market interest rate. If , for example these companies were issuing their bonds in the different time and market interest rate was different then bond could be sold at premium(the bond will cost more then its face value), par (same as face value), and discount (bond will cost less then face value.)
How do financial institutions calculate interest rates?
Financial institutions base their interest rates on fluctuation of today's market. If the market is doing well then interest rates are high. If the market is down, interest rates goes down along with it.
How to determine the appropriate pricing for a corporate bond?
The appropriate pricing for a corporate bond is determined by considering factors such as the bond's credit rating, interest rates, market conditions, and the issuing company's financial health. Investors use these factors to assess the risk and potential return of the bond, which helps determine its price in the market.
What is the market interest rate formula used to calculate the current interest rates in the financial market?
The market interest rate formula used to calculate current interest rates in the financial market is typically based on factors such as inflation, risk, and the overall economic environment. It is determined by the supply and demand for credit in the market, as well as the policies of central banks.
What are the basic factors that determine the value of the currency?
The value of a currency is primarily determined by supply and demand in the foreign exchange market, along with factors such as interest rates, inflation rates, political stability, and economic performance of the country issuing the currency. Market speculation and central bank interventions can also influence the value of a currency.
Is the price at which bonds sell determined by the interaction of stated rates of interest and market rates of interest?
Yes, the price at which bonds sell are determined by the interaction of stated rates of interest and market rates of interest.
