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jeka94
2 years ago
15

If the fed sells $5 billion of u. S. Bonds in the open market and the reserve requirement is 5 percent, m1 will eventually:.

Business
1 answer:
olasank [31]2 years ago
8 0

If the fed sells $5 billion of u. S. Bonds in the open market and the reserve requirement is 5 percent, m1 will eventually decrease by $100 billion.

<h3>What is the effect of the sale of bonds on M1?</h3>

M1 is comprised of the most liquid money supply e.g. currency, demand deposits.  When the Fed sells bonds they are conducting a contractionary monetary policy. The aim of this policy is to reduce the supply of money in the economy.

Reduction in the value of money = value of bonds sold / reserve requirement

$5 billion /0.05 = $100 billion.

To learn more about monetary policy, please check: brainly.com/question/3817564

#SPJ1

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Piper Corporation’s standards call for 1,000 direct labor-hours to produce 250 units of product. During October the company work
jekas [21]

Answer: C. 1200 hour

Explanation:

It is indeed 1200 hours because the units produced increased by 20% and therefore, theoretically, so should the time.

5 0
3 years ago
Recently the corporate tax law in the U.S. changed so that firms that previously faced a marginal tax rate of close to 40% now p
garri49 [273]

Answer:

a.) increased the after-tax cost of debt

Explanation:

Missing options are:

a.) increased the after-tax cost of debt

b.) did not change the after-tax cost of debt

c.) increased the value of the deduction for interest expense

d.) decreased the after-tax cost of debt

The after tax cost of debt is calculated by multiplying the debt's principal x interest rate x (1 - tax rate). If the tax rate decreases, the after tax cost of debt increases. e.g.

$1,000 owed at 6%, when tax rate was 40% ⇒ after tax cost of debt = $1,000 x 6% x (1 - 40%) = $36 or 3.6%

now, $1,000 owed at 6%, when tax rate is 21% ⇒ after tax cost of debt = $1,000 x 6% x (1 - 21%) = $47.40 or 4.74%

4 0
3 years ago
Excelor stock is expected to pay $3.00 per share as its next annual dividend. The firm has a policy of increasing the dividend b
andrew-mc [135]

Answer:

30.92%

Explanation:

You find the answer by calculating the cost of equity using two methods; Dividend discount model and CAPM

<u>Dividend discount model;</u>

cost of equity; r = (D1/P0) +g

whereby, D1 = next year's dividend = 3.00

P0= current price = 13.65

g = dividend growth rate = 11% or 0.11 as a decimal

r = (3/13.65) + 0.11

r = 0.2198 + 0.11

r= 0.3298 or 32.98%

<u>Using CAPM;</u>

r = risk free + beta (Market risk premium)

r = 0.049 + (2.8 * 0.0856)

r = 0.049 + 0.2397

r = 0.2887 or 28.87%

Next, find the average of the two cost of equities;

=(32.98% + 28.87% )/2

= 30.92%

3 0
3 years ago
To make low-profit customers more profitable the ABC bike shop-
Anna007 [38]

Answer:

C) allows existing customers to upgrade to a newer model by trading in their older model.

D) though it previously offered free delivery, now charges for deliveries made outside the city.

Explanation:

If ABC company wants to change low profit customers into more profitable customers, they need to:

  1. encourage low profit clients to buy larger quantities by offering promotions (e.g. get a discount if you buy a bike, helmet and other gear all together)
  2. forgo certain services or features to low profit customers, e.g. free delivery only for expensive bikes
  3. increase the price of your product for low profit customers (e.g. charge a delivery cost for cheap bikes)
  4. offer upgrading options to low profit clients

8 0
3 years ago
When the Fed buys securities from the public, banks' reserves ________ and the quantity of money ________.
kow [346]

When Fed buys securities from the public, banks' reserves increases and the quantity of money reduces in supply.

<h3>What are Securities?</h3>

Securities simply put are assets that has monetary values like bonds, stocks and they can be traded.

In recent times, people enjoy the digital form of money/securities like cyptocurrencies.

Learn more about Securities here:

brainly.com/question/25720881

#SPJ1

5 0
2 years ago
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