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Why is the cost of debt less than the cost of preferred stock if both securities are priced to yield 10 percent in the market?
Interest is deductible, dividends are not, so the cost of debt is reduced by the tax savings on the interest. e.g. if taxed at the 35% marginal rate, to pay $100 of dividends, $153.85 would have to be earned, $53.85 paid in taxes, then the $100 of dividends paid, while only $100 would have to be earned to pay $100 in interest. Because of this, companies would normally prefer to use debt to provide capital. Of course, this increases the risk of default and bankrupcty which have their own costs. Also, the more debt a company has, the higher interest rate it will be expected to pay for debt issued in the future. Issuing preferred stock would increase the equity in a company and would lower the interest rate it is expect to pay on future issued debt. The ability on either preferred stock or debt to be converted into common shares will lower the interest rate expected.
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Comment on the statement The bond market is primarily an OTC market?
Yes, because bonds are not listed on an exchange but rather priced and sold between dealers and traders. They are not regulated like the listings on exchanges. The bond market is very archaic. You can't get a quote for a bond on any of the major exchanges. If you want to sell a bond, your broker shops around for a buyer, making up to 2 or 3 phone calls to get a bid offer.
One major reason for the law of demand is that?
people substitute relatively lower-priced goods for relatively higher-priced goods.
What is the lowest mortgage rate realistically possible?
The answer depends on the market (are rates increasing or decreasing) and the lender. Mortgages are consumer products and as such are priced by the sellers based on what return they need to turn sufficient profit. This answer changes daily with the market and as lenders change pricing guidelines. The best way to gauge the market is to go to either the Wall Street Journal or a website such as BankRate.com and check out the overnight averages on any given day. From there you can check bank lending offers and see the rate range.
What is the difference between close ended mutual fund and open ended mutual funds?
An open end mutual fund generally continues to accept investment after the fund is started. As this happens, the fund can grow larger as more investors buy shares in the fund. The open end fund then takes those new dollars and buys additional securities. Shares are priced at the end of day by taking the value of the fund's net asset value divided by the number of shares outstanding. Each share is thus priced at par value to the underlying investments in the fund. To "cash-out" of one's investment, the shares are redeemed by the fund itself, usually after trading is over for the day at the net asset value price for that day. Occasionally, if management of an open end fund feel cash is flowing into the fund to quickly, they may close the fund to new investment, but is still classified as an open end fund. A closed end mutual fund generally accepts investment only during initial setup. After that, shares in the fund are bought and sold similar to a stock on one of the exchanges. The shares may sell at a discount or a premium to the underlying securities owned by the fund, depending on the market. To "cash-out", an investor sells the shares on the exchange at the market price during the trading day. The fund itself is not involved in the day-to-day sale and purchase of fund shares.
Is Market Trading Institute the best place to learn about Forex?
As a former student I would suggest that you spend your money elsewhere. This is an over priced Forex "marketing" company. You can learn about what they teach by reading a book or going to a quality trading website and use the money they would like you to spend in your trading account.
How much is a garlic clove typically priced at in the market?
A garlic clove is typically priced at around 25 to 50 cents in the market.
How much is a clove of minced garlic typically priced at in the market?
A clove of minced garlic is typically priced at around 0.50 to 1 in the market.
Who installs the most reasonably priced security barriers?
The most reasonably priced security barriers are installed by companies such as Trenwa, Barriers-UK, ADT Securities, and Alvarada Manufacturing. All of these companies can be contacted for estimates.
If A handbag originally cost 85.00 now it is priced at 68.00 what is the percent of decreased?
20 percent off
If something is priced 13.36 and there is a sales tax of 4 percent what is the answer?
$0.53
How much is the Black Luster Soldier card priced at 2 million worth in the current market?
The Black Luster Soldier card priced at 2 million is worth 2 million in the current market.
What price will you play for a computer priced at 2090 if you get a 5 percent?
The price will be $1,985.50
Are clothes always priced to the dollar?
yes they are unless you go to a trade market
Is silver priced on the market in us or troy ounces?
It is priced in troy ounces along with other precious metals like gold, platinum and palladium.
Which is the lowest priced Sony HD camcorder on the market?
The lowest priced Sony HD camcorder on the market would have to be the Sony Handycam HDR-CX190/B HD Camcorder. It's as low as $186.99 and as high as $286.99.
What is the sales price on a jacket priced 725 if the sales tax rate is 7 percent?
Answers for Adding 20 Percent To 725 Is
Why Packard stopped making cars?
Basically, they approached the postwar auto market with pre-war ideas, and priced themselves out of that market.
