Q: On January 1, 2017, when the fair value of its
On January 1, 2017, when the fair value of its common shares was $80 per share, Hammond Corp. issued $10 million of 8% convertible debentures due in 20 years. The conversion option allowed the holder...
See AnswerQ: Somerton Corporation had two issues of securities outstanding: common shares and
Somerton Corporation had two issues of securities outstanding: common shares and a 6% convertible bond issue in the face amount of $6 million. Interest payment dates of the bond issue are June 30 and...
See AnswerQ: On January 1, 2017, Olson Corporation issued $6 million
On January 1, 2017, Olson Corporation issued $6 million of 10-year, 7% convertible debentures at 104. Investment bankers believe that the debenture would have sold at 102 without the conversion privil...
See AnswerQ: The treasurer of Hing Wa Corp. has read on the Internet
The treasurer of Hing Wa Corp. has read on the Internet that the stock price of Ewing Inc. is about to take off. In order to profit from this potential development, Hing Wa purchased a call option on...
See AnswerQ: On September 1, 2017, Oxford Corp. sold at 102
On September 1, 2017, Oxford Corp. sold at 102 (plus accrued interest) 5,200 of its $1,000 face value, 10-year, 9% non-convertible bonds with detachable stock warrants. Each bond carried two detachabl...
See AnswerQ: On January 1, 2017, Tiamund Corp. sold at 103
On January 1, 2017, Tiamund Corp. sold at 103, 100 of its $1,000 face value, five-year, 9% non-convertible, retractable bonds. The retraction feature allows the holder to redeem the bonds at an amount...
See AnswerQ: On November 1, 2016, Aymar Corp. adopted a stock
On November 1, 2016, Aymar Corp. adopted a stock option plan that granted options to key executives to purchase 45,000 common shares. The options were granted on January 2, 2017, and were exercisable...
See AnswerQ: On January 1, 2017, Roper Inc. agrees to buy
On January 1, 2017, Roper Inc. agrees to buy 3 kilos of gold at $40,000 per kilo from Golden Corp on April 1, 2017, but does not intend to take delivery of the gold. On the day that the contract was e...
See AnswerQ: Refer to E16-2. Assume the same facts except that
Refer to E16-2. Assume the same facts except that the forward contract is a futures contract that trades on the Futures Exchange. On January 1, 2017, Roper is required to deposit $65 with the stockbro...
See AnswerQ: On January 2, 2017, Jackson Corporation purchased a call option
On January 2, 2017, Jackson Corporation purchased a call option for $500 on Walter’s common shares. The call option gives Jackson the option to buy 1,000 shares of Walter at a strike price of $30 per...
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