Answer: Maximize joint welfare in respective or the right owner.
Explanation: A coase solution to a problem of externality insures that a socially efficient outcome is to maximize the joint welfare, irrespective of the right of ownership.
The Coase theorem states that when transaction cost are low, two parties will be able to bargain and reach an efficient outcome in the presence of an externality.
Answer:
The required rate of return is r = 0.1475 or 14.75%
Explanation:
The required rate of return is the minimum return that investors demand/expect on a stock based on the systematic risk of the stock as given by the beta. The expected or required rate of return on a stock can be calculated using the CAPM equation.
The equation is,
r = rRF + Beta * (rM - rRF)
Where,
- rRF is the risk free rate
- rM is the return on market
r = 0.06 + 1.25 * (0.13 - 0.06)
r = 0.1475 or 14.75%
A number of separate but interdependent budgets that formally lay out the company's sales, production, and financial goals and that culminates in a cash budget, budgeted income statement, and budgeted balance sheet is master budget.
The lower-level budgets, cash flow projections, budgeted financial statements, and financial plans of an organisation are all included in the master budget, which is a thorough financial planning document. It is often created by a company's budget committee under the direction of the budget director.
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The reserve ratio is the portion of the money of the depositor that should be available in cash in the bank. This amount should only be in the bank and not used for all other purposes. Hence, the balance money can be used for the bank operations, increasing the supply.
In this item, we are given that the reserve ratio is only 5%. This means that, 95% of the money can be used by the bank for its operation. This amount can be calculated by multiplying the amount deposited by the decimal equivalent of 95%. That is,
= ($1000)(0.95)
= $950
Therefore, the money supply will increase by $950.
