29. Which of the following statements are true? Statement I. An interest rate reflects the rate of return that a creditor receives when lending money, or the rate that a borrower pays when borrowing money. Interest rates change over time só does the rate earned by creditors who provide loans or the rate paid by borrowers who obtai loans. Statement I1. Interest rate movements have a direct influence on the market values of debt securities, such as money market securities, bonds, and mortgages. Statement II. Interest rate movements have an indirect influence on equity security values because they can affect the return by investors who invest in equity securities. Statement IV. Since interest rates have an influence on securities, participants in financial markets attomnt to n

29. Which of the following statements are true? Statement I. An interest rate reflects the rate of return that a creditor receives when lending money, or the rate that a borrower pays when borrowing money. Interest rates change over time só does the rate earned by creditors who provide loans or the rate paid by borrowers who obtai loans. Statement I1. Interest rate movements have a direct influence on the market values of debt securities, such as money market securities, bonds, and mortgages. Statement II. Interest rate movements have an indirect influence on equity security values because they can affect the return by investors who invest in equity securities. Statement IV. Since interest rates have an influence on securities, participants in financial markets attomnt to n

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter6: Accounting Quality

Section: Chapter Questions

Problem 4QE

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18. Which of the following statements are true?Statement I. An interest rate reflects the rate of return that a creditor receives when lending money, or the rate that a borrower pays when borrowing money. Interest rates change over time, so does the rate earned by creditors who provide loans or the rate paid by borrowers who obtain loans. Statement II. Interest rate movements have a direct influence on the market values of debt securities, such as money market securities, bonds, and mortgages. Statement III. Interest rate movements have an indirect influence on equity security values because they can affect the return by investors who invest in equity securities. Statement IV. Since interest rates have an influence on securities, participants in financial markets attempt to anticipate interest rate movements when restructuring their investment or loan positions. a. I,II,III b. I,II,IV c. I,III,IV d. I,II,III,IV
Answer the following statements It is an average interest rate that banks offer in the financial market: a. effective rate b. Cetes c. CPP d. TIIE It is the payment for the use of someone else's money: a. simple interest b. interests c. amount d. interest rate
Which of the following does not impact the calculation ofthe cash interest payments to be made to bondholders?a. Face value of the bond.b. Stated interest rate.c. Market interest rate.d. The length of time between payments.
Which one of the theories states that “the rate of interest is set in the market for money balances”? Time-Preference Theory of Interest Liquidity Preference Theory Fisher’s Law Loanable Funds Theory of Interest Rates
What is a common method used by banks to account for the interest income on loans that considers changes in market interest rates? a) Straight-line interest b) Effective interest rate method c) Simple interest d) Discounted cash flow method
The interest rate observed in the marketplace for a debt instrument? Observed interest rate Inflation-free interest rate Risk-free rate of interest Real rate of interest
( ) is a measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates. a.Convexity b.Maturity c.Duration d.Immunization
1. Which of the following is a function of every financial market? A) It determines the level of interest rates. B) It allows common stock to be traded. C) It allows loans to be made. D) It channels funds from lenders-savers to borrowers-spenders. 2. Securities are for the person who purchases them, but they are for the person/firm who sells them. A) assets; liabilities B) liabilities; assets C) income; liabilities D) liabilities; expenses 3. Which of the following is/are money market instrument(s)? A) Negotiable certificates of deposits B) Common stock C) T-bonds D) 4-year maturity corporate bond 4. Who has voting rights at a shareholders' meeting? A) All common stock owners. B) Common stock owners who own more than 1% of the company. C) Only the company's managers. D) All preferred stock owners. 5. These are investments where shareholders become the owners of the portfolio of the account. These portfolios of securities could be made up of equity securities or debt securities. A)…
The APR is a. the average annual percentage cost paid on deposits b. the average rate paid on deposits c. the average rate paid for credit d. the average annual percentage cost paid for credit Decreasing the amount of liquid assets held for the purpose of meeting loan demands and deposit withdrawals and increasing the usage of deposit and nondeposit sources of funds paying market rates of interest is known as: a. leverage adjustment b. liability management c. liquidity management d. liquidity adjustment Times interest earned is a measure of the a.gross profit compared to annual interest payments b.net earnings after taxes compared annual interest payments c.operational earnings of the firm (EBIT) compared to annual interest payments d.net earnings before taxes compared to annual interest payments A Bankers’ Acceptance is most commonly used in connection with a. financing inventories b. financing securities c. financing trust accounts d. financing foreign trade
Which one of the below most likely respresents the periodic receipts of interest? the coupon rate. principal payments. coupon payments. the default premium.
.... Give and explain the factors that affect the interest rate on the loan?
Premium on Bonds Payable has a debit balance. O is a contra account. is deducted from bonds payable on the balance sheet. is considered to be a reduction in the cost of borrowing.