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d. In many cases a firm is obliged to make regular contributions to a (n) sinking fund, which is then used to repurchase bonds.
e. Most bonds give the firm the right to repurchase or call the bonds at specified prices.
f. The benchmark interest rate that banks charge to their customers with good to excellent credit is generally termed the prime rate.
g. The interest rate on bank loans is often tied to short-term interest rates. These loans are usually called floating-rate loans.
h. Where there is a (n) private placement, securities are sold directly to a small group of institutional investors. These securities cannot be resold to individual investors. In the case of a (n) public issue, debt can be freely bought and sold by individual investors.
i. A long-term rental agreement is called a (n) lease.
j. A (n) convertible bond...
A (n) warrant gives its owner the right to buy shares in the issuing company at a predetermined price.
7. Preferred Stock. In what ways is preferred stock like long-term debt? In what ways is it like common stock?
Preferred stock is like long-term debt because it provides a specific dividend or a fixed claim, rather than a varying one. Preferred stock is also like long-term debt because it comes without any voting rights or control.
Preferred stock is like common stock because it represents a partial ownership claim in the company, with this claim being dependent on the number of shares owned. Preferred stock is also like common stock because it entitles the stockholder to dividends. A significant difference though, is that the dividend is fixed for preferred stock, but variable for common stock.
Accounting Policy Setting Using Ex-Ante and Ex-Post Accounting Techniques Firms make contracts every day because they are required to gain assets that would be costly for them to obtain otherwise. At one time these contracts were made from an opinion-based accounting model called normative theory. Many departments used this theory because they believed that they could use the knowledge that they had gained to make accurate guesses regarding financial and intangible accounting
Accounting Career Choice Accounting has become one of the most popular degree choices in recent years because it can lead to a great deal of careers that can be much more exciting than they may initially sound. The problem for the student who chooses to follow a desire to get into accounting may be that they realize after they have taken a few classes that they will have to choose between
Loyalty to the client was clearly placed above loyalty to the overall public good and the standards of the profession. "Enron paid Andersen $25 million for its audit…and $27 million for 'consulting' and other services" which meant that Anderson had a substantial financial stake in retaining Enron as a client (Kadlec 2002). The Enron case illustrates the difficulty of self-policing within the industry. Today, providing additional services besides the
Accounting Ethics Ethics of Accounting There have been breaches in the ethics of accounting in recent times. With that in mind, evaluate whether or not the current trend in the regulation of business establishments is favorable to ethical behavior. Supply supportive evidence to your answers (Jeter, 2003). The generally accepted principles of accounting and the standards of auditing in contemporary practice stipulate that the financial statements of any establishment should contain the following
Accounting internal control is the methods and procedures used to ensure the accuracy and validity of the financial statements, as well as to protect against abuse and fraud, making sure information is delivered in an accurate and timely manner. (Griffin) Internal controls consist of information systems and physical controls that are carried out in the line of job duty. The two primary goals of internal control is to ensure that
Accounting forms the overall backbone of the financial world. Financial markets are predicated on consumer and user confidence. Without confidence, consumers attempting to make financial decisions will be doing so using inaccurate and incomplete information. The lack of transparency regarding the truthfulness of reported numbers creates uncertainty within the capital markets. This uncertainty regarding the accuracy of information ultimately undermines the overall financial system, causing harm to society in the