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3 years ago

If the Fed sells $2 million of bonds to the First National Bank, what happens to reserves and the monetary base?

Business

1 answer:

Sindrei [870]3 years ago

4 0

Answer:

Reserves fall by $2 million, and the monetary base falls by $2 million.

Explanation:

In the books of First National Bank, the purchase of $2 million of bonds by First National Bank, from the Federal Reserve means there is a reserve with the Federal Reserve represented by security which stands as asset.

In the books of the Federal Reserve, The sales of bonds to First National Bank will create a liability from the reserve assets.

See attached for the T-accounts explain the answer

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(c) Which of the following statements are true? (You may select more than one answer. Single click the box with the question mar

AysviL [449]

Answer:

Customer and Product Margin under Activity-based Costing and Traditional Costing

True Statements:

1. If a customer orders more frequently, but orders the same total number of units over the course of a year, the customer margin under activity based costing will decrease.

2. If a customer orders more frequently, but orders the same total number of units over the course of a year, the product margin under a traditional costing system will be unaffected.

Explanation:

Customer Margin is the difference between the total revenue generated from a customer minus the acquisition and service costs. In the above instance, the customer margin decreases because of the costs of servicing the customer's frequent orders. Customer service costs are usually higher with more frequent orders, when activity-based costing is employed because frequent orders increase the activity level and the associated costs.

Product Margin is the profit margin generated per product. It is the markup on the cost of the product. It shows the difference in amount between the selling price and the manufacturing cost. Frequent orders cannot change the product margin under the traditional costing technique unlike it does with the activity-based costing technique.

6 0

3 years ago

There are only three stocks in the economy. Stock A has 20 shares outstanding and a price per share of $10. Stock B has 15 share

gregori [183]

Answer:

Market value of stock A = 20 shares x $10 = $200

Market value of stock B = 15 shares x $3 = $45

Market value of stock C = 10 shares x $5 = $50

Total market value $295

Amount to invest in stock A

= $200/$295 x $5,000

= $3,389.83

Explanation:

In this case, we will calculate the market value of each stock by multiplying the number of each stock by their corresponding market prices.

Thereafter, we will divide the market value of stock A by the total market value multiplied by amount available for investment ($5,000).

7 0

3 years ago

A company purchases shipments of machine components and uses this acceptance sampling plan: Randomly select and test 26 componen

Inessa [10]

Answer: 0.7973

Explanation:

Binomial probability formula :-

$P(x)=^nC_x\ p^x(1-p)^{n-x}$ , where P(x) is the probability of getting success in x trials , p is the probability of success in one trial and n is the number of trials.

Given : The probability of getting a defect components : $0.06$

If randomly select and test 26 components , then the probability that this whole shipment will be accepted will be :-

$P(x$

Hence, the probability that this whole shipment will be accepted = 0.7973

7 0

3 years ago

Gammy Corporation provides services with a normal price of $800,000 and a trade discount of $100,000. Terms are 2/10, n/30 and t

oee [108]

Answer:

$686,000

Explanation:

net service revenue = gross revenue - discount for early payment

gross revenue = total sales price - trade discount

gross revenue = $800,000 - $100,000 = $700,000

net service revenue = $700,000 - 2%($700,000) = $700,000 - $14,000 = $686,000

4 0

3 years ago

The Quick Buck Company is an all-equity firm that has been in existence for the past three years. Company management expects tha

Vika [28.1K]

Answer and Explanation:

a. The computation of the current price per share is shown below:

Current price per share = Value of Firm ÷ Number of stock outstanding

where,

Value of Firm is

= $800,000 ÷ 1.13 + $1,250,000 ÷ 1.13^2

= $1,686,897.96

And, the number of outstanding shares is 35,000 shares

So, the current share price is

= $1,686,897.96 ÷ 35,000 shares

= $48.20

c. The computation of the shares of stock sold is shown below:

No of shares of stock must be sold is

= ($910,000 - $800,000) ÷ 48.20

= $2,282.16

c. The computation of the new price per share of stock is shown below:

Current price per share = Value of Firm ÷ Number of stock outstanding

where,

Value of Firm is

= $910,000 ÷ 1.13 + $1,250,000 ÷ 1.13^2

= $1,784,243.09

And, the number of outstanding shares is 35,000 shares and $2,282.16

So, the current share price is

= $1,784,243.09 ÷ 35,000 shares + $2,282.16

= $47.86

5 0

3 years ago

If the Fed sells​ $2 million of bonds to the First National​ Bank, what happens to reserves and the monetary​ base?

If the Fed sells $2 million of bonds to the First National Bank, what happens to reserves and the monetary base?