You Have a Savings Bond That Will Be Worth $500

question 133

Multiple Choice

You have a savings bond that will be worth $500 when it matures in 3 years,but you need cash today.If the current going rate of interest is 5%,what is your bond worth if you sell it today (rounded to the nearest dollar) ?

• A) $475
• B) $432
• C) $425
• D) $412

Comprehend the financial treatment and implications of acquiring preferred and common shares by a parent company in a subsidiary.

Analyze the determination of non-controlling interests in a subsidiary that has restricted shares.

Calculate non-controlling interest on consolidated statements of financial position using the entity approach to goodwill.

Understand the classification of preferred shares under IFRS and its implications on financial reporting.

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Definitions:

Discount Rate

The Discount Rate is the interest rate that the Federal Reserve charges commercial banks for overnight loans. It influences liquidity and borrowing costs in the banking system.

WACC

Weighted Average Cost of Capital; a calculation of a firm's capital costs, weighted according to the proportion of equity and debt in the firm's capital structure.

Negative Net Present Value

An indication that the projected earnings (discounted back to present value) of an investment will be less than the initial investment cost.

Competitor's Cost

The expenses incurred by industry rivals, which can influence competitive pricing strategies.