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Times interest earned The following data were taken from recent annual reports of Caliber Company, which operates a low-fare airline service to more than 50

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Times interest earned The following data were taken from recent annual reports of Caliber Company, which operates a low-fare airline service to more than 50 cities in the United States: Current Year Preceding Year Interest expense $70,000 $77,000 Income before income tax 301,000 177,100 a. Determine the times interest earned ratio for the current and preceding years. Round to one decimal place. Current year Preceding year b. Although Caliber Company had enough earnings to pay interest in the preceding year, the in this ratio will be by the debtholders. Click to watch the Concept Clip Investor Bond Price Risk video and then answer the questions below. 1. What happens to the prices of bonds as the market rate of interest increases? a. Doubles b. Decreases c. Increases d. Stays the same 2. Why do long-term bonds typically have higher coupon rates shorter-term bonds? a. They have a higher rate of return b. They are a lower tax risk. c. More investors want to buy them.

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