What is the difference between a fixed income security and a variable income security, and which...

What is the difference between a fixed income security and a variable income security, and which would get preference upon the liquidation of a company?
If a company has some extra cash that is lying idle and wants liquidity and safety in a government investment, what type of investment is likely to be chosen?
What types of backing are given by firms for their debt instruments?

Solutions

Expert Solution

Fixed income securities generally provides with the fixed rate of return after a particular periodic time whereas in variable income security, the returns are based upon certain particular criteria that will keep on fluctuating the value of money each and every day so, there is no fixation in amount that an investor will earn.

Example of fixed securities are bonds while the example of variable securities are common stocks. In the event of liquidation fixed income securities will get the preference over claim of the Asset than the variable income security.

If company has extra cash that is idle and it wants liquidity and safety in government investment, it should invest in TREPS and short term treasury bills as they both have the government backing.

Backings given by firm for their debt instruments would be in the form of long term assets such as fixed assets and long term receivables from investment projects. It will also provide with periodic debt repayment in the form of interest.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

h) What is the difference between fixed costs and variable costs? What is the difference between...

h) What is the difference between fixed costs and variable costs? What is the difference between accounting costs and economic costs? What is the differ - ence between private costs and external costs? Name all the categories that comprise economic costs. i) How do we determine the profit-maximizing level of production using analy - sis of total costs and total revenues? What is the rule for profit maximization using marginal analysis? What happens to economic profits in a perfectly competitive...

What is the difference between fixed costs and variable costs?’ Are there fixed costs in the...

What is the difference between fixed costs and variable costs?’ Are there fixed costs in the long run? Explain briefly. Are fixed costs also sunk costs? Explain. What are diminishing marginal returns as they relate to costs? Which costs are measured on a per-unit basis: fixed costs, average cost, the average variable cost, variable costs, and marginal cost? How is each of the following calculated: marginal cost, average total cost, average variable cost? What shapes would you generally expect each...

What is the difference between a fixed and a variable cost? What is meant by the...

What is the difference between a fixed and a variable cost? What is meant by the term relevant range? How is relevant range applicable to CVP analysis? What is operating leverage and how/why would companies use operating leverage?

Expalin the difference between variable and fixed costs

Explain the difference between fixed and variable costs

What is the difference between variable and fixed costs in the context of total cost and...

What is the difference between variable and fixed costs in the context of total cost and per unit costs? Provide examples. short answer

What is the difference between a fixed and a variable cost and how is each type...

What is the difference between a fixed and a variable cost and how is each type of cost used in the budgeting process? What are some examples of fixed and variable cost?

A: explain the difference between fixed and variable cost. B: explain the difference between explicit and...

A: explain the difference between fixed and variable cost. B: explain the difference between explicit and implicit cost. C: in the long run in perfect competition economist say that profit =0 but would any firm be involved in that market in the first place?

What is the difference between a direct and indirect cost? Variable versus fixed cost? What are...

What is the difference between a direct and indirect cost? Variable versus fixed cost? What are the differences in accounting for inventoriable (product) versus period costs?

what is the difference between fixed costs and variable costs? explain the shape of the total...

what is the difference between fixed costs and variable costs? explain the shape of the total variable cost curve and explain why and how the total cost and total variable cost curves differ. answer with your own word ( 200 words )

Subjects