What are the advantages and disadvantages of a fixed principal, fixed interestloan?

Q: What are Contingent Liabilities?  Give an example.  What are the factors that determine the reason…

A: A liability, the occurrence of which is uncertain that is it may or may not occur is known as a…

Q: What role do interest rates play in allocating capital to different potential borrowers?

A: Rate of interest : It is the amount paid by a borrower to use the capital borrowed from the…

Q: What happens, when greater the interest rate other things being equal?

A: NPV(Net Present Value) is used to analyze the profitability of the project. It is the difference…

Q: In what situations is interest capitalized?

A:

Q: Define the term After-tax cost of debt?

A: Cost of capital is the overall cost of financing the funds from all sources of finance. The cost of…

Q: What is the difference between the stated interest rate and the market interest rate?

A: Bonds PayableBonds payable are referred to long-term debts of the business, issued to various…

Q: What is a capitalized interest? Give three examples?

A: Capitalized interest:Interest Cost incurred to finance the construction of a long-term construction…

Q: In what situations is interest capitalized rather than expensed?

A: Capitalized interest is the cost of the funds used to finance the construction of a long term asset…

Q: Early extinguishment of debt often produces a gain or a loss. How is the gain or loss determined?

A:

Q: Define Interest Capitalization.

A: Interest Expense: The cost of debt which is incurred during a particular accounting period is called…

Q: (d) What are the three steps we use to calculate total non-controlling interest?

A: Non- controlling interest refers to minority interest. It is an ownership interest wherein a…

Q: Is taxable interest income generated via active or passive investments, or through a portfolio of…

A: The Answer

Q: explain whether true or false : The interest rate parity does hold in realty

A: Interest rate parity is an releationship between spot exchange rate and the forward exchane rate…

Q: In general terms, what is the Capital AssetPricing Model (CAPM)? What assumptions weremade when it…

A: CAPM: The capital asset pricing model (CAPM) is a method utilized to determine a hypothetically…

Q: Which of the following may be measured subsequently at amortized cost? Group of answer choices A…

A: Amortized cost  Amortized cost is referred to as accumulated portion of the cost recorded of fixed…

Q: What is the fair value option? Briefly describe the controversyof applying the fair value option to…

A: Meaning of fair value option:

Q: Taxable interest income is active or passive or portfolio ?

A: Active income is an income that is earned by performing a service. Active income includes salaries,…

Q: are the three steps we use to calculate total non-controlling interest?

A: Solution:- A non-controlling interest (NCI), formerly known as a minority interest represents a…

Q: difference between debt and quity

A: A company’s capital consists of two forms, one is equity and the other is debt. When a company is…

Q: what is the formula for compounding interest?

A: Compound interest can be defined as the interest earned on principal amount and on all previous…

Q: When the fair value of plan assets is multiplied with a discount rate, an interest expense arise.…

A: There is mainly two types of accounts which are kept in the defined benefit plan.  One is Defined…

Q: What is the difference between simple and compound interest? Give examples.

A: Simple interest: It is the interest calculated on the principal of the loan and the account holder…

Q: What do we mean by covered interest arbitrage parity? Explain in detail by a diagram.

A: Covered interest arbitrage: It is relationship between forward premium and interest rates. If…

Q: What is the default classification for an equity investment? A  Fair value through profit or loss…

A: Answer:-  Equity investment meaning:- Equity investment is purchasing the shares directly from the…

Q: What is meant by issue of debentures as collateral Security?

A: Collateral is an asset or property that is given by a borrower to lender to secure the loan.…

Q: What’s the difference between simple interest and add-on interest as bankers usethese terms?

A: Add on interest is calculated by totaling the principal borrowed and interest and then multiplying…

Q: Which of the following may be measured subsequently at amortized cost? a. A derivative b. A…

A: Solution: A derivative and non derivative equity instruments are held for trading and measured at…

Q: In what way do current liabilities and long-term liabilities differ from each other?

A: Current liabilities are liabilities that are due within one year. In other words, current…

Q: What is another way of saying "Interest earned on interest"?

A: "Interest earned on interest" means the interest earned on the interest amount which was earned on…

Q: Why is premium on issue of debentures considered a capital profit?

A: Debenture: Debenture is a type of debt instrument and it is unsecured by collateral. Since,…

Q: What is (1 + i) n in the compound interest formula?

A: Compound interest is when the interest is charged on the principal amount as well as on the interest…

Q: What common assumptions do the Capital Asset Pricing Model (CAPM) and Arbitrage Pricing Theory (APT)…

A: Portfolio management is the process of encompassing the activities of investment in assets and…

Q: What are some advantages and disadvantages of short-term versuslong-term debt?

A: Debt is an amount which is borrowed by the firm. When the maturity of debt is up to one year, it is…

Q: hat is the difference between simple interest and compound interest?

A: The difference between simple interest and compound interest is as follows-

Q: What does the term noncontrolling interest mean?

A: This term is generally used when consolidated statement is prepared by the parent entity. There are…

Q: The difference between simple interest and compound interest?

A: There is various difference between simple and compound interest.  Few of them are as follows-

Q: For balance sheet purposes, can the fair value of a derivative in a loss position be netted against…

A: Financial accounting standards board (FASB): This is the organization which creates, develops, and…

Q: Which of the following may be measured subsequently at amortized cost? A. non-derivative debt…

A: Solution: "Non-derivative debt instrument" may be measured subsequently at amortized cost.

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.