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3 years ago

How does fractional banking allow there to be an increase in the money supply?

1 answer:

4 0

Banks can lend up to 90% of money on deposit in the bank to other clients.
The other 10% that the bank does not lend is called the "fractional reserve".

Now, by lending this 90% to a client, the money supply may increase based on the procedure below:
First client deposits 100$ in the bank
Bank lends 90$ to second client who deposits these 90$ in another bank
This other bank lends 81$ from the deposited 90$ to a third client who deposits them in a new bank.
The new bank lends 72.9$ out of these 81$ to a fourth clients who deposits them in a different bank......and so the cycle continues increasing the money supply

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Neal Enterprises common stock is currently priced at $36.80 a share. The company is expected to pay $1.20 per share next month a

yanalaym [24]

Answer:

The cost of equity for Neal Enterprises is 5%

Explanation:

In order to calculate the cost of equity for Neal Enterprises we would have to make the following calculation:

cost of equity=((Do(1+g)/Po)+g

According to givn data we have the following:

Do=$1.20

Po=$36.80

g=2%

cost of equity=((1.20(1+0.02)/36.80-1.20)+0.02

cost of equity=((1.20(1+0.02)/35.60)+0.02

cost of equity=0.05

The cost of equity for Neal Enterprises is 5%

5 0

3 years ago

Clarifying the issues of a problem is the _____ step in the problem solving process.

solmaris [256]

Answer:

hii there

The correct answer is option ( A )

8 Step Problem Solving Process

Step 1: Define the Problem. What is the problem?

Step 2: Clarify the Problem.

Step 3: Define the Goals.

Step 4: Identify Root Cause of the Problem.

Step 5: Develop Action Plan.

Step 6: Execute Action Plan.

Step 7: Evaluate the Results.

Step 8: Continuously Improve

Explanation:

Hope it helps

have a nice day

8 0

3 years ago

Which of the following represents a business process you would find in the Operations Management departmenta. rdering inventoryb

Rudik [331]

Answer:

a. Ordering inventory.

Explanation:

Operation management is an adminstration job for designing, producing, controlling and delivering the goods and service to the end user with highest use of efficiency within the organization. This help the organization to maximize the profit with optimum utilization of resources. Inventory management is also part of operations management, wherein inflow and outflow of inventory are managed, which include storage, ordering, labeling, issuing, withdrawing etc.

6 0

3 years ago

The margin of safety is a measure of the distance between budgeted sales and the break-even point. It can be measured in dollars

Rudiy27

Answer:

The correct option is these statements are true

Explanation:

Margin of safety is the measure of the reduction in sales that needs to be recorded before a company makes no profit,invariably the difference the planned sales volume and the sales volume required to break even(makes no profit no loss).

The margin of safety can be expressed in volume,say 100 units of a product,in dollar terms ,say each product sells for $100 each,the margin of safety becomes $10,000($100*100) and can also be expressed in percentage terms depending on the way management wants it stated.

4 0

3 years ago

Holliman Corp. has current liabilities of $407,000, a quick ratio of 1.90, inventory turnover of 4.50, and a current ratio of 3.

Sati [7]

Answer:

Cost of goods will be $4670325

Explanation:

We have given current liabilities = $407000

A quick ratio = 1.90

Current ratio is 3.40 and inventory turnover = 4.50

We know that current ratio is the ratio of current assets and current liabilities

So $3.4=\frac{current\ assets}{current\ liabilities}$