All categories

4 years ago

What happens when the Federal reserve buys a treasury bond

Business

1 answer:

alukav5142 [94]4 years ago

7 0

Answer:

If the Federal Reserve buys bonds in the open market, it increases the money supply in the economy by swapping out bonds in exchange for cash to the general public. Conversely, if the Federal Reserve sells bonds, it decreases the money supply by removing cash from the economy in exchange for bonds.

You might be interested in

An agent sells his client 10 U.S. government bonds due to mature in 30 years. According to NASAA's Statement of Policy on Unethi

Artemon [7]

Answer:

The bonds are guaranteed as to principal and interest payments by the US government.

Explanation:

According to NASAA's Statement of Policy on Unethical or Dishonest Business Practices of Broker-Dealers and Agents, a broker can say US government bonds are guaranteed on principal and interest payments.

However if inflation sets in and interest rates rises there is no guarantee from the government that interest paid on the bonds will match the higher interest rate.

So legally this statement is correct, even though the investor can lose money as a result of higher interest rate in the future.

4 0

3 years ago

Current Forecast is 2500 units, current 1st shift capacity is 1300 units. Market growth rate is 10%. How much capacity do you ne

Afina-wow [57]

Answer:

250 units

Explanation:

Calculation to determine How much capacity do you need to buy for next round

Using this formula

Next round capacity needed=Current Forecast*Market growth rate

Let plug in the formula

Next round capacity needed=2500 units*10%

Next round capacity needed=250 units

Therefore How much capacity do you need to buy for next round is 250 units

3 0

3 years ago

Which of the following scenarios demonstrates the leverage effect on net operating income due to the existence of fixed costs?

morpeh [17]

Answer:

C) A 25% increase in sales resulting in a 30% increase in net operating income.

7 0

3 years ago

"I’m not sure we should lay out $250,000 for that automated welding machine," said Jim Alder, president of the Superior Equipmen

NikAS [45]

Answer:

The annual net cost savings promised by the automated welding machine

Annual Costs savings in replacing 6 welders $108,000

Reduced Material costs $6,500

Total annual Costs savings = $114,500

Note there is a $3,000 annual maintenance cost that will then be taken off this savings amount to make up the Annual Net cash inflow of $111,500

A. The Net Present value is $72,227. Kindly refer to the attached document for the clear presentation

B. The project should be accepted because it delivers a positive NPV. Meaning the net benefit outweighs the cost of owning the new Assets.

The Discounted net Cash flow for the 6 years (aside the initial outlay) is $402,227.

Annually this comes to $67,038.

The benefit the business gets in the switch to the automatic welders is approximately $67,038 annually.

7 0

3 years ago

You plan to retire in 30 years and you are investing $250 per month in the BMO Large-Cap Growth mutual fund. The fund has an ave

mr Goodwill [35]

Accumulated Balance is given by :

$A=P\dfrac{(1+i)^n-1}{i}\times (1+i)$

Here,

n = time period = 30×12 = 360.

$i=\dfrac{13.45}{100}\times \dfrac{1}{12}=0.0112$

P = principal price = $250.

Putting all given values in above equation, we get :

$A=250\times \dfrac{(1+0.0112)^{360}-1}{0.0112}\times (1+0.0112)\\\\A=\$1221659.48$

Hence, this is the required solution.

6 0

3 years ago