Question

concord company has assets of $607,000, liabilities of $248,000, and equity of $359,000. it buys office equipment on credit for $84,000. the effects of this transaction include:

Answer 1

Fixed Income Active Management could potentially have advantages due to the bond market's size and complexity, concessions in new issues, frequent index constituent changes, and the presence of noneconomic investors. The correct option is D) All answers are correct.

Step-by-step explanation:

The question pertains to potential advantages of Fixed Income Active Management in the bond market compared to equity markets in the United States. Fixed Income Active Management may offer several advantages, including:

• A) The size and complexity of the bond market: The bond market's considerable size and complexity can provide numerous opportunities for informed managers to identify mispriced securities and exploit these inefficiencies.
• B) New issue concessions: New bonds issues sometimes offer concessions to investors, which active managers can take advantage of to secure better yields.
• C) Frequent changes to index constituents: The regular updates to bond indices can create opportunities for active managers to adjust portfolios before the changes are reflected in the indices.
• E) Noneconomic investors: The presence of investors who may not be driven solely by economic gains, such as central banks or insurance companies, can lead to price discrepancies that active managers can exploit.

Considering the options provided, the correct answer is D) All answers are correct, as they all represent potential advantages of Fixed Income Active Management.

Answer 2

When Concord Company buys office equipment on credit for $84,000, its assets and liabilities both increase by $84,000, while equity remains unchanged.

Step-by-step explanation:

The effects of buying office equipment on credit for $84,000 on Concord Company's balance sheet are as follows:

• Assets: The assets will increase by $84,000, as office equipment is considered an asset.
• Liabilities: The liabilities will also increase by $84,000, as the purchase was made on credit.
• Equity: The equity will remain unchanged since this transaction does not directly impact the owner's investment in the company.