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qwelly [4]
3 years ago
9

1. Suppose banks keep no excess reserves and no individuals or firms decide to hold more cash during the deposit expansion proce

ss. If someone suddenly discovers $50 million in buried treasure, explain what would happen to the money supply if the required reserve ratio is 10 percent. How would your answer change in the required reserve ratio was 20 percent?
Business
1 answer:
anygoal [31]3 years ago
6 0

Answer:

Increase by $500 m

Increase by $250 m  instead of $500 m

Explanation:

Since all the deposits over and above the reserve requirements are loaned out by the banks,

We can calculate the Credit multiplier and see how a new 50 m deposit will affect the money supply.

Credit multiplier @ 10% reserve = 1 / 0.10 = 10 times

So a new deposit of 50 m will create new money of 10 * 50 = 500 m thus increasing the money supply by this amount.

For a 20% reserve ratio, Credit multiplier changes a,

Credit Multiplier = 1 / 0.2 = 5 times

This will change the money supply by = 5 * 50 = 250 m. This is the amount of new money that will be created with reserve ratio of 20%.

Hope that helps.

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You own a stock portfolio invested 35 percent in Stock Q, 25 percent in Stock R, 15 percent in Stock S, and 25 percent in Stock
Harlamova29_29 [7]

Answer:

1.03

Explanation:

Beta is used to measure systemic risk. The higher beta is, the higher the systemic risk and the higher the compensation demanded for by investors.

Systemic risk are risk that are inherent in the economy. They cannot be diversified away.

The portfolio's beta can be determined by adding together the weighted beta of each stock in the portfolio

weighed beta of a stock = percentage of the stock in the portfolio x beta of the stock

Stock Q = 0.35 x 1.34 = 0.469

Stock R = 0.25 X 0.88 = 0.22

Stock S = 0.15 x 0.57 = 0.0855

Stock T = 0.25 x 1.02 = 0.255

Portfolio beta = 0.469 + 0.22 + 0.0855 + 0.255 = 1.0295 = 1.03

5 0
3 years ago
Marketers can use to link the virtual world of online social networking with the
Sladkaya [172]

Answer:

location-based social networking is the correct answer.

Explanation:

4 0
2 years ago
Read 2 more answers
Foghorn Company entered into a sales transaction in which it agreed to receive common stock from Leghorn Corporation as payment
Sedbober [7]

Answer:

The journal entry should be:

Dr Investment in Leghorn Corporation XX

    Cr Accounts receivable XX

Explanation:

Foghorn Company must record the noncash payment as an asset which should be equal to the amount of money that it generally would have collected from the services provided. Since the payment is done through stocks, it must record that collection as an investing account.

Since transferring stocks usually takes a couple of days at least, the original journal entry should have recorded a debit to accounts receivable and a credit to service revenue.

8 0
3 years ago
If $800 is borrowed at 8% interest, find the amounts due at the end of 4 years if the interest is compounded as follows. (Round
Alisiya [41]

Answer:

(i) $133.12

(ii) $297.6

(iii) $300.8

(iv) $301.6

Explanation:

From the compounding formula;

Future value = Present value (1+\frac{r}{m}) ^{mn}

where r is the rate, m is the number of payment per year, and n is the number of years.

Interest = future value - present value

Given that present value = $800, r = 8%, n = 4 years.

(i) annually,

m = 1, so that;

Future value = 800(1.08)^{4}

                     = $933.12

Interest = $933.12 - $800

             = $133.12

(ii) quarterly,

m = 3, so that;

Future value = 800(1+\frac{0.08}{3}) ^{(4x3)}

                      = 800(1.372)

                      = $1097.6

Interest = $1097.6 - $800

             = $297.6

(iii) monthly,

m = 12, so that;

Future value = 800(1+\frac{0.08}{12}) ^{(4x12)}

                     = 800(1.376)

                     = $1100.8

Interest = $1100.8 - $800

             = $300.8

(iv) weekly,

m = 54, so that;

Future value = 800(1+\frac{0.08}{54}) ^{(4x54)}

                     = 800(1.377)

                     = $1101.6

Interest = $1101.6 - $800

             = $301.6

4 0
3 years ago
The disadvantage of owning a mutual fund that invests in common stocks is the risk of loss of ___.
Ludmilka [50]

Answer:

"Principal" Since the value of common stock could decline to zero, investors do carry the risk of losing their entire principal. That risk is greatly reduced when investing in bonds, because if you hold a bond to its maturity date, you will at least get back the par value ($1000) of the bond.

Hope this helps :) -Mark Brainiest Please :)

5 0
3 years ago
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