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Klio2033 [76]
3 years ago
8

How does an expansionan expansion in the central​ bank's domestic assets ultimately affect its balance sheet under a fixed excha

nge​ rate? A. It leads to an equal fallfall in liabilities. B. It leads to an equal fallfall in foreign​ assets, without change in liabilities. C. It leads to an equal increaseincrease in foreign liabilities. D. It leads to an equal increaseincrease in domestic liabilities.
Business
1 answer:
vladimir1956 [14]3 years ago
5 0

Answer:

Option D          

Explanation:

In simple words, A determined currency rate, also called a fixed currency value, refers to the form of exchange rate regimes during which a currency agency sets or pegs the value of the currency against both the value of yet another currencies, a combination of other currencies, or another value factor, like gold.

Thus, in order to keep the currency at a fixed level the monetary authority must increase their liability also but on a domestic level only as two accounts are considered to be separate in such systems.

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Grandma and Grandpa Generous had many children, but they have only one grandchild,Harold. Grandma and Grandpa would like to give
Leni [432]

Answer:

Gift Tax GSTT

Explanation:

In such a scenario, Grandma and Grandpa Generoushave a current liability to the Gift Tax GSTT. This tax rate applies to Grandma and Grandpa Generous because the gift exceeds the limit per individual for gifting and because they have exhausted their lifetime gift-tax exemption. Meaning that they have to pay taxes on this gift of $5.43 million which according to the GSTT guidelines is a fixed rate of 40% of the gift that was given.

8 0
3 years ago
the italian airline alitalia will pay $10 million to United Airlines one year from today. The spot rate is $1.35/E, while the 1-
Vitek1552 [10]

Answer:

alitalia should do the forward hedge to hedge its transaction exposure

Explanation:

Alitalia can construct the money market hedge as follows

1. borrow Euro whose present value is equal to the amount to be paid.

2. convert it to foreign currency at the current spot rate.

3. place it in a deposit

4. make the payment when the deposit reaches maturity

PV of payment = 10000000/1.05

                         = 9523809.525

converting in to Euro at the spot rate we get 6802721.09 Euros

so Alitalia has to borrow the above amount and convert it and invest it at 5%.

now the payable amount from the loan is  6802721.09(1+0.03) = 7006802.72 Euros

Hence Alitalia has effective managed to locl in a forward rate of 1.427$/euros (10000000/7006802.72)$/euros

Therefore, alitalia should do the forward hedge to hedge its transaction exposure

6 0
3 years ago
Problem:Water flows from a bathroom tap at a rate of 2 gallons every 6 seconds. Questions At this rate,how many minutes will it
katrin2010 [14]

Answer:

4 minutes.

Explanation:

The rate of flow from the tap is 2 gallons every six second

which comes out to be 1 gallons per 3 seconds.

so for 80 gallons we can simply

3  * 80 = 240 which is 240 seconds.

Thus it would take 4 minutes to fill up the 80 gallon tub.

4 0
3 years ago
You want to construct a portfolio containing equal amounts of U.S. Treasury bills and two stocks. If the beta of the first stock
Tasya [4]

Answer:

the beta of the second stock is 1.77

Explanation:

The beta of the second stock is shown below;

Investment in each = (1 ÷ 3)

Now as we know that

Portfolio beta = Respective investments × Respective weights

1 = (1 ÷ 3 × 1.23) + (1 ÷ 3 × beta of the second stock) + (1 ÷ 3 × 0)

We assume the Beta of risk-free assets would be zero

1 = 0.41 + (1 ÷ 3 × beta of the second stock)

The beta of the second stock is

= (1 - 0.41) × 3

= 1.77

Hence, the beta of the second stock is 1.77

8 0
3 years ago
On November 1 of year 0, Jaxon borrowed $50,000 from Bucksnort Savings and Loan for use in his business. In December, Jaxon paid
Stels [109]

Answer:

a. $750

b. $750

Explanation:

The first thing to do is calculate the monthly interest as follows:

Monthly interest = Total interest ÷ 12 = $4,500 ÷ 12 = $375

The rent for two months in year 0 (November and December) = $375 × 2 = $750.

Prepaid expenses (January to October of year 1) = $4,500 - $750 = $3,750.

Decision:

Prepaid expenses is not deductible under either cash accounting method or accrual accounting method for tax purposes.

Therefore, Jaxon can deduct only $750 two months (November and December) relevant for year 0 under both cash accounting method and accrual accounting method.

The prepaid expenses of $3,750 is not deductible in year 0 but can only be deducted in year 1.

4 0
3 years ago
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