If the federal reserve board decreases reserve requirements for banking institutions, ____

The S&P 500 Index is one of the most commonly used benchmark indices for the U.S. equity markets. Consisting of 500 companie

seropon [69]

Answer:

1. Based on my understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher?

Th e correct option is (b). The outlook for the economy and the markets is for improvement.

2. You invest $100,000 in 40 stocks, 20 bonds, and a certificate of deposit (CD). What kind of risk will you primarily be exposed to?

Th e correct option is (b). Portfolio risk

3. Generally, investors would prefer to invest in assets that have:

a. A higher-than-average expected rate of return given the perceived risk

Explanation:

1. Based on my understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher?

Th e correct option is (b). The outlook for the economy and the markets is for improvement. If the outlook of the economy and the market prospects of the stocks are for improvements, it then means that the Price Per Earning of the stock will be increasing, which is a positive economic trend.

Moreover, since we are talking about the average P/E it can be inferred that in the very long run, average of the S&P 500 Price to Earnings (PE) ratio (since 1900) is approximately 15.8, and the ratio since 1946 (the post-World War II period) is 17.3, so, it is fair to call a "normal" PE ratio about 16.5, which is relatively stable over the years.

2. You invest $100,000 in 40 stocks, 20 bonds, and a certificate of deposit (CD). What kind of risk will you primarily be exposed to?

Th e correct option is (b). Portfolio risk is the chance that the combination of assets or units, within the investments that you own, fail to meet financial objectives. Each investment within a portfolio carries its own risk, with higher potential return typically meaning higher risk. It can be computed as the risk of the two-securities portfolio, first take the square of the weight of 40 Stocks ($100,000.00) and multiply it by square of standard deviation of the 40 stocks. Repeat the calculation for 20 Bonds and a Certificate of Deposit.

3. Generally, investors would prefer to invest in assets that have:

a. A higher-than-average expected rate of return given the perceived risk Yes they will because a higher -than average expected rate of return will inform the investor the type of strategies to adopt to guarantee the expected earnings containing the risk.

5 0

2 years ago

Year 1 Year 2 Amounts billed to clients for services rendered $ 182,000 $ 232,000 Cash collected from clients 154,000 184,000 Ca

Advocard [28]

Answer:

Explanation:

Year 1:

Cash collected from clients $154,000

Salaries paid to employees for services rendered during the year $27,000

Utilities $84,000

Purchase of insurance policy $58,200

So, in order to find net cash flow, $(154000-27000-84000-58200)=-15200

Year 2:

Cash collected from clients $184,000

Salaries paid 34000

Utilities paid 94000

Insurance paid is 0

So, net cash flow $184000-$(34000+94000)=$56000

Year1 paid 27000 in salaries, accrued =32000

So still 5000 has to be paid in year 2

Year 2 paid 34000 ⇒ so accrued is 29000

Insurance accrued for each year is 58200/3=19400

Income statement for year 1 and 2

year1 year2

Revenue:

Income from services 182000 232000

Expense

Salary 84000 94000

Utilities 32000 29000

Insurance 19400 19400

Net income 46600 89600

5 0

2 years ago

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If real GDP is $200 billion, full employment GDP is $500 billion, and the marginal propensity to consume is 0.75, then Congress

Anuta_ua [19.1K]

Answer:

The answer is: decrease taxes by $100 billion.

Explanation:

If the real GD is $200 billion, which represents only 40% of full employment GDP, then the government should try to increase consumer spending either by decreasing taxes or increasing government spending, or a combination of both.

In this case, I chose the tax decrease since government have budget limitations and they can only decrease taxes by so much before hitting a deficit. Additionally, when you have a large tax reduction, usually government spending either stays the same or decreases.

If the government decreases taxes by $100 billion, the marginal propensity to consume shall result in a $75 billion increase in consumption. According to the Keynesian Multiplier theory, that $75 billion should generate additional production, creating a virtuous cycle that should increase the real GDP in a larger proportion.

3 0

2 years ago

Which of the following does not influence the consumer when he or she

Diano4ka-milaya [45]

WHATS THE REST OF THE QUESTION ?

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2 years ago

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In August, one of the processing departments at Tsuzuki Corporation had beginning work in process inventory of $24,000 and endin

Ipatiy [6.2K]

Answer:

b. $307,000

Explanation:

Costs to be accounted in cost reconciliation report = Opening balance of work in process + Cost of production added during the month

= $24,000 + $283,000

= $307,000

Cost reconciliation report shows what costs need to be accounted for in a month and the manner in which they are actually accounted for.

It is a step in preparation of production report which shows how beginning work in process inventory and the costs which are added to production during the period are recorded.

Hence in cost reconciliation report pertaining to the month of Aug, opening work in process and costs added to production during the month are recorded.

3 0

2 years ago

If the federal reserve board decreases reserve requirements for banking institutions, _____.