Answer: Option (B) is correct.
Explanation:
Given that,
Reserve ratio = 25%
Fed reserve bank sells (securities) to public = $120 million
When a central bank sells the government securities to the public then as a result money supply in an economy decreases. This is an instrument of monetary policy known as " Open market Operations".
The supply of money is directly decreases by $120 million.
and
Money creating potential of banks = Amount of securities × 
= 120 × 
= 120 × 3
= $360 million
Hence, a decrease in money supply could eventually reach a maximum of $360 million.
Answer:
I can't understand anything
The sale of the A Corporation stock and the subsequent purchase of the C Corporation stock on Harlon's pretax earnings results in an unrealized holding gain.
The unrealized holding gain occurs because the Harlon Corporation reinvested the sale proceeds with the purchase of C Corporation stock. While the pretax earnings will increase by the gain (difference between the sale proceeds and the investment's book value), the unrealized holding gain <em>is not taxable.</em>
Thus, the effect of the sale increases the pretax earnings in the financial statements but the purchase of another investment cancels its taxation effect for the current moment.
Learn more: brainly.com/question/24188658
Answer:
8%
Explanation:
The formula to compute the cost of common equity under the DCF method is shown below:
= Current year dividend ÷ price + Growth rate
where,
Current year dividend is $2
Price is $40
And, the growth rate is 3%
Now put these values to the above formula
So, the cost of equity would equal to
= $2 ÷ $40 + 3%
= 0.05+ 0.03
= 8%
Answer:
Private savings = $360 trillion
Explanation:
Private savings is a summation of household and business savings. When there is economic growth there is stimulation of private savings, people have more money to save.
Private savings also drives economic growth because people have more money to invest in businesses that will have a higher output.
In a closed economy the formula for private savings is
Private savings = Y + TR - C - T
Private savings= 1414 trillion + 0 - 1010 trillion - 44 trillion
Private savings = $360 trillion
