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

Q: Why is the return associated with common stock referred to as a residual claim? Contrast this kind…

A: Common stock holders are the owners of the business. Profits earned by the company will be the…

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 is the cost of equity based on the own-bondyield-plus-judgmental-risk-premium method?

A: Answer: Bond-yield-plus-judgemental-risk-premium method involves adding a judgemental risk premium…

Q: How does the availability and cost of outside capital affect dividend policy?

A: The question is based on the concept of dividend policy and factors of dividend policy.

Q: What is the effect of a company electing the fair value option with respect to an investment that…

A: Equity method: Equity method is the accounting method used for accounting equity investments which…

Q: How does the decision to use debt involve a risk-versus-return trade-off?

A: Risk return trade off: If an investment has high risk, the investors expect more returns from it. If…

Q: How do Capital Guaranteed Notes function?

A: Capital notes are short term unsecured debts which are generally issued  by firms in order to pay…

Q: Why are holding gains and losses treated differently for trading securities and securities…

A:

Q: What is share capital retirement? What is the effect of this? Discuss.

A: Share Capital Share capital is the fund which are raised from the public for the operations of the…

Q: How can an investor benefit from ane equity investment that does not pay dividends?

A: In layman’s words, financial management is the management of the finance or funds in an…

Q: Why is the adjusted present value approach appropriate forsituations with a changing capital…

A: Capital structure is the distribution of various sources of funding to the organization like debt,…

Q: What causes a gain or loss on the sale of a bond investment?

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Q: dividend reinvestment plan

A: Benefits to Investors- *Investors accumulate more shares without paying any commission or brokerages…

Q: Share option compensation is what accounting subject?

A: Stock-based compensation: It is a way of paying employees, executives, and directors of a company…

Q: How does a dividend payment impact the option price?

A: The option price(call and put) is impacted by the new information about the announcement of the…

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: 1. How are passive investments accounted for under ASPE? a) Cost of amortized cost. b) FVTPL…

A:

Q: When an acquirer chooses between cash offer or stock offer, which of the followings is the least…

A: Acquisition refers to obtaining the other company wholly or partially by paying the cash…

Q: How do stocks and bonds differ in terms of the future payments that they are expected to make? Which…

A: Introduction: Bond is nothing but debt securities issued by a company or government if they want to…

Q: What is a Financial Derivative? What is the role of Derivatives in managing Financial Risk? Give an…

A: Financial derivative: Derivative is a contract between two parties whose value is based on the…

Q: . Which of the following statements regarding available-for-sale equity investments is true? a.…

A: As the name suggests the available-for-sale equity or securities are the equities that are held to…

Q: Under which circumstances can the speculator gain a profit and what is the risk of carry trades?

A: The big risk in a carry trade is the uncertainty of exchange rates. Using the example above, if the…

Q: Implied cost of capital approach can be used in determining the discount rate in equity valuation:.…

A: The implied cost of capital approach will be focusing upon finding out a discount rate which will be…

Q: Explain how to Adjust Equity Investments to Fair Value.

A: Fair value method is used when a company buys stock of another company but the ownership stake is…

Q: Why is there a cost for retained earnings? Group of answer choices Earnings can be reinvested or…

A: Retained earnings is the amount of net income which remains after the distribution of dividends.

Q: What is the fair value option? Where do companies thatelect the fair value option report unrealized…

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Q: Why are held-to-maturity investments applicable only todebt securities?

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Q: Stock appreciation right would normally be settled through

A: Second option is wrong because stock appreciation right is not settled through issue of share…

Q: How is the adjustment to fair value recorded differently for a cash flow hedge versus a fair value…

A: Hedge Hedge is simply called financial instrument which can be reduce the mitigation of risk which…

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: What are Capital Markets, and how do bonds markets fit into the definition of Capital Markets?

A: Capital markets is a broad term used to describe a venue where funds are exchanged between suppliers…

Q: Do investors generally prefer dividends or share repurchases? Support your answer.

A: Firm issues various securities to arrange the funds for the business and pay periodicals return on…

Q: Why are equity investments initially recognized at cost and valued differently at a subsequent…

A: Equity investments are those investments which are made by one person in some other company by…

Q: trading

A: Ans. Debt investments include government, corporate and municipal bonds and includes real estate…

Q: What causes a gain or loss on the sale of a bond investment? Group of answer choices when the…

A: Bond Investment Investment Bonds are a kind of financial instrument in which the authorized issuer…

Q: What is the relationship between a discount rate (or IRR) and a capitalization rate? What causes…

A: Introduction: The discount rate is nothing but a rate that reduces potential cash flows in order to…

Q: REQUIREMENTS: 1.  How much is the cost of equity using the capital asset pricing model? 2. How…

A: Cost of Equity represents the expected return by the shareholders of the company.It can be…

Q: What is a “liquidity premium?” When do investors increase their attention to such a premium?

A: LIQUIDITY PREMIUM A liquidity premium is an additional value that the investors demand when the…

Q: How are share repurchases an alternative to dividends, and why might investors prefer them

A: The share repurchase is the alternative to dividends because when a company repurchases it’s issued…

Q: Explain how electing the fair value option affects accounting for investments.

A: The fair value option provides the business the option to record the financial instruments at fair…

Q: What are the strategies of deferring capital gains, an exchange may be used in conjunction with…

A: The 1031 Exchange permits Associate in Nursing capitalist to sell assets or property and…

Q: What is stock split? Distinguish between a bonus issue and a stock split.

A: Stock Split Means: it refers to that a company divides its existing share into multiple shares or a…

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