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2 years ago

Liquidity preference theory is most relevant to the:.

1 answer:

7 0

Liquidity preference theory is a theory of demand and supply that is relevant only for the short-run economy.

<h3>What is a short-run economy?</h3>

A short-run economy is a time duration where one input is constant, that is, fixed whereas other inputs tend to change, that is, variable. In that time, the economy of a country variates depending on the duration of a time period.

Liquidity preference theory states that an investor demands a greater premium or rate of interest on those securities which are having longer maturity periods and keeping all the factors unchanged, the investor wants to have readable cash or other assets that can be easily converted into liquid cash. This theory is ideally suitable for a shorter-run economy where demand and supply related to money are balanced by making the rates of interest adjusted in that respect.

Therefore, the short-run economy can apply the theory of liquidity preference.

Learn more about the liquidity preference theory in the related link;

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Lupe's recorded balance was off by $43, and she thinks that it's because she made a mistake in her records. What mistakes did sh

pochemuha

Answer:

Lupe made a mistake when she recorded her paycheck in the wrong column. She also failed to record one of her purchases.

Explanation:

Note: This question is not complete as the attachment is not included. The complete question is therefore provided before answering the question by providing the attachment. See the attached photo for the attachment.

The explanation of the answers is now provided as follows:

From the attached photo, it can be observed that the paycheck of 11/15 was wrongly entered in the Payment Amount column instead of the Deposit amount column.

In addition, Lupe forgot to record her $12 Debit Purchase of 11/7 as shown in the Checking Account Statement from Anytown Bank.

Therefore, Lupe made a mistake when she recorded her paycheck in the wrong column. She also failed to record one of her purchases.

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3 years ago

For the coming year, Crane Inc. is considering two financial plans. Management expects sales to be $301,770, operating costs to

ra1l [238]

Answer:

increase in ROE due to plan B = 26.44% - 20.55% = 5.89%

Explanation:

currently EBIT = $301,770 - $266,545 = $35,225

TIE ratio = EBIT / interest expense

Plan A:

interest expense = ($200,000 x 25%) x 8,8% = $4,400

TIE ratio = $35,225 / $4,400 = 8

net income (assuming no taxes) = $30,825

ROE = $30,825 / $150,000 = 20.55%

Plan B:

TIE ratio = 4 = $35,225 / interest expense

interest expense = $35,225 / 4 = $8,806.25

total debt = $8,806.25 / 8.8% = $100,071

equity = $99,929

net income = $35,225 - $8,806.25 = $26,418.75

ROE = $26,418.75 / $99,929 = 26.44%

increase in ROE due to plan B = 26.44% - 20.55% = 5.89%

6 0

4 years ago

During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $229,13

Naya [18.7K]

Answer:

Assets will be overstated and Net Income understated

Explanation:

The effect on the balance sheet and income statement

<u>Balance Sheet :</u>

Inventory will be overstated

Inventory belongs to the Current Asset group

Meaning Assets will be overstated

<u>Income Statement :</u>

Inventory will be overstated

This reduces cost of sales with an amount greater

Meaning Profits will be overstated

Conclusion

The effect on the balance sheet and income statement would be : Assets will be overstated and Net Income understated.

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3 years ago

Individual Activity 1: Marty and the Martins

Vesna [10]

Answer:

that is cool.

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3 years ago

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A product has a contribution margin of $8 per unit and a selling price of $45 per unit. Fixed costs are $26,000. Assuming new te

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Answer:

New break even in units is 4000 units

Explanation:

The break even point in units is the number of units that must be sold to earn enough total revenue to cover total costs. This is the point where there will be no profit and no loss. The formula for break even in units is,

Break even in units = Fixed costs / Contribution margin per unit

The new contribution margin per unit = 8 * 140% = $11.2

New Fixed costs = 26000 + 18800 = $44800

New Break even in units = 44800 / 11.2 = 4000 units

5 0

3 years ago