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murzikaleks [220]
2 years ago
7

(Scenario: Assets and Liabilities of the Banking System) According to the Scenario: Assets and Liabilities of the Banking System

, suppose that the reserve ratio is 10 percent when the Federal Reserve sells $25,000 worth of U.S. Treasury bills to the banking system. If the banking system does NOT want to hold any excess reserves, _______ will be _______ the money supply.
Business
1 answer:
Phantasy [73]2 years ago
7 0

If the banking system does NOT want to hold any excess reserves,  $250,000 will be <u>added </u>to the money supply.

<h3>What is an excess reserves?</h3>

Excess reserves is known to be the capital reserves that is said to be held by a bank or financial institution and it is one that is too much or is in excess of what is needed by regulators, creditors, or others.

Since there is  $25,000 worth of U.S. Treasury bills, one will multiply it times 10 = $250,000

Therefore,  If the banking system does NOT want to hold any excess reserves,  $250,000 will be <u>added </u>to the money supply.

Learn more about excess reserves from

brainly.com/question/17099821

#SPJ12

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The risk-free rate of return is 2% and the expected return on the market portfolio is 8%. Oklahoma Oilco has a beta of 2.0 and a
solmaris [256]

Answer:

The multiple choices are as follows:

18.6%

14.0%

22.8%

25.0%

The second option is the correct answer,14%

Explanation:

The capital asset pricing asset model formula for computing a firm's cost of equity according to Miller and Modgiliani is given below:

Ke=Rf+Beta*(Mr-Rf)

Rf is the risk free of 2% which is the return expected from zero risk investment such as government treasury bills.

Beta is how risky an investment in a company is compared to similar businesses operating in similar business sector of the company given as 2.0

Mr is the expected return on market portfolio which 8%

Ke=2%+2*(8%-2%)

Ke=2%+2*(6%)

Ke=2%+12%=14%

3 0
2 years ago
If you don't know how much you will spend in a particular category such as clothing, you should
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Find out how much you have look at what clothing you need then look for the best prices and try to find some discounts so you can save some money so just maby you can get another product with the money you saved.

6 0
2 years ago
R.S. Green has 250,000 shares of common stock outstanding at a market price of $28 a share. Next year’s annual dividend is expec
zhannawk [14.2K]

Answer:

WACC 6.18%

Explanation:

to get the cost of capital we solve using the gordon model:

\frac{divends}{return-growth} = Intrinsic \: Value

\frac{divends}{Price} = return-growth

\frac{divends}{Price} + growth = return

$Cost of Equity =\frac{D_1}{P)} +g

D1 1.55

P 28

f 0.00

g 0.02

$Cost of Equity =\frac{1.55}{28} +0.02

Ke 0.075357143

Then for the cost of debt, we need to calculate the YTM of the bonds:

which is the rate at which the present value of the coupon payment and maturity equals the market price:

For the complexity this is done with excel or a financial calculator there is also an approximation formula

YTM with excel: 0.073516565

now that we good this we need to determinate the weigth of equity and debt:

250,00 shares x 28 dollars each = 7,000,000

1,500 bonds of $1,000 each at 98% = 7,350,000

value of the company: 7,000,000 + 7,350,000 = 14,350,000

Ew: 7,000,000 / 14,350,000 = 0.487804878

Dw: 7,350,000 / 14,350,000 =0.512195122

Now we got all values and we can determinate the WACC:

WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})

Ke 0.075357143

Equity weight 0.487804878

Kd 0.074

Debt Weight 0.512195122

t 0.34

WACC = 0.075357143(0.48780487804878) + 0.074(1-0.34)(0.51219512195122)

WACC 0.0617752 = 6.18%

7 0
3 years ago
Suppose there are only two firms that sell smartphones: Flashfone and Pictech. The following payoff matrix shows the profit (in
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Answer:

Flashfone and Pictech

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b. If Pictech prices high, Flashfone will make more profit if it chooses a(high,low)__low____price, and if Pictech prices low, Flashfone will make more profit if it chooses a (high,low) __low____ price.

c. Considering all of the information given, pricing high (is, is not) _is not_ a dominant strategy for both Flashfone and Pictech.

Explanation:

a) Data and Calculations:

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Flashfone Pricing High 11, 11        2, 18

                             Low  18, 2      10, 10

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