a b c or d please Ip 500-510] A new corporation may not use all the terms involv

Question

a b c or d please

Ip 500-510] A new corporation may not use all the terms involved in this question. But there are many companies that were established decades ago, and they use terms and definitions that were current when they were established. Zayad Corporation, which was established in the early 20th Century (in 1910 to be exact). sold 40,000 shares of common stock to the public. Later, it bought back (repurchased) 8,000 shares The company plans to reissue these 8,000 shares to the public in the future. What do we call the 8,000 shares that were repurchased by the company and that it plans to reissue to the public in the future? 0 Restricted stock O Treasury stock O Outstanding stock @ Converted stock

Explanation / Answer

1.

Correct Answer:

Treasury stock

These are the stocks that are repurchased or bought back from the market by the company and held with the company. It can be issued in the future or can be with the company as the scenario demands.

2.

Correct Answer:

With each interest payment, $200 of the premium is amortized.

Working note:

Bond premium = bond price – face value = 32000-30000 = $2000

No. of interest payments = 10 semiannual payments

Bond premium deduction per interest payment = 2000/10 - $200

3.

Correct Answer:

$33750

Working note:

Face value = $750000

Annual coupon rate = 95

Payment mode = semiannual period

Hence,

Interest payment per period = (9%/2)*750000

Interest payment per period = $33750

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