Answer: 8.05%
Explanation:
From the question, we are informed that Holdup bank has an issue of prefered stock witha stated dividend of $7 that just sold for $87 per share.
The banks cost of prefered will be:
= Dividend / Stock value
= 7/87
= 0.0805
= 8.05%
Given Information:
Real GDP growth = Y = 3%
Money growth = M= 7%
Real interest rate = r = 2%
Velocity = constant = 0%
Required Information:
Nominal interest rate = ?
Answer:
Nominal interest Rate = 6%
Explanation:
The quantity theory of money (QTM) equation is given by
ΔM + ΔV = ΔP + ΔY
ΔP = ΔM + ΔV – ΔY
Substituting the percentages given in the problem,
ΔP = ΔM + ΔV – ΔY
ΔP = 7% + 0% – 3%
ΔP = 4%
The fisher equation which relates real and nominal interest rate is given by
Real interest rate = Nominal interest rate - Inflation rate
Re-arranging the equation to find nominal interest
Nominal interest rate = Real interest rate + Inflation rate
Nominal interest rate = 2% + 4%
Nominal interest Rate = 6%
The income effect shows a change in someone or the economy's income and how it changes the quantity of a good or service. If one is making more, they are usually buying more of something. If someone is making less, they are often buying less of something.
In the market for magazines, the "income effect" means that if the price of a magian rises magazine readers will purchase less magazines.
Answer:
See below
Explanation:
With regards to the following, recall that;
Retained earning at end = Beginning retained earning + Net income - dividend earned
$78,000 = Net income - $29,000
Net income = $78,000 + $29,000
Net income = $107,000
Therefore, the net income for year 2 would be $107,000
