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ira [324]
3 years ago
8

A bank will often hold government securities as an asset. If a bank were to sell S500,000 in government securities to an individ

ual who paid for the bond in cash and the bank placed this cash in its vault, by how much would the money supply change as a result? a. It would increase by $500,000 multiplied by the reciprocal of the required reserve ratio. b. It would decrease by $500,000 multiplied by the reciprocal of the required reserve ratio. c. There would be no change to the money supply. d. It would increase by $500,000. e. It would decrease by $500,000.
Business
1 answer:
sleet_krkn [62]3 years ago
5 0

Answer:a.

It would increase by $500,000 multiplied by the reciprocal of the required reserve ratio.

Explanation:

A bank will often hold government securities as an asset. If a bank were to sell S500,000 in government securities to an individual who paid for the bond in cash and the bank placed this cash in its vault, by how much would the money supply change as a result  -  It would increase by $500,000 multiplied by the reciprocal of the required reserve ratio.

The money supply is the entire stock of currency and other liquid instruments circulating in a country's economy and is given by the formula:

MONEY SUPPLY = RESERVES X MONEY MULTIPLIER

Therefore the bank reserves increasing in the scenario will increase money supplier by the effect of the money multiplier or the reciprocal of the required reserve ratio.

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From the case above, Sheridan not attending the services for two weeks could be explained by things such as personal issues or physical illness. Since she considers herself as religious who attend regularly, it is very likely that averaged over time, Sheridan attends worship services regularly.

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Blue Co. has a patent on a communication process. The company has amortized the patent on a straight-line basis since 2014, when
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Great Lakes Steel Supply is losing significant market share and thus its managers have decided to decrease the firm's annual div
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Answer:

There's an error in the numbers for this question; I found the correct one and pasted it below;

"Great Lakes Steel Supply is losing significant market share and thus its managers have decided to decrease the firm's annual dividend. The last annual dividend was $1.30 per share but all future dividends will be decreased by 2.75 percent annually. What is a share of this stock worth today at a required return of 15.5 percent? "

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Use dividend discount model (DDM) to calculate the stock price

P0 = \frac{D0(1+g)}{r-g}

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Next, plug in the numbers to the DDM formula above;

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