Answer:
The answer is: B) FICA taxes withheld from employees' payroll checks should never be recorded as a liability since the employer will eventually remit the amounts withheld to the appropriate taxing authority.
Explanation:
FICA taxes (or payroll taxes) are based on an employee's salary. Both employees and employer pay FICA taxes for Social Security and Medicare. Employers withhold these taxes from their employees' paychecks, and then pays them to the Internal Revenue Service (IRS).
Answer: $5 billion
Explanation:
First find the spending multiplier which is a multiplier that shows how Aggregate demand increases as a result of additional spending.
Multiplier = 1 / (1 - Marginal propensity to consume)
= 1 / ( 1 - 0.8)
= 5
If the government wants to raise Aggregate demand by $25 billion, they should spend:
Increase in AD = Amount * Multiplier
25 billion = Amount * 5
Amount = 25 / 5
= $5 billion
Answer:
C. A risk averse investor would choose the economy in which stock returns are independent because risk can be diversified away in a large portfolio.
Explanation:
if stock prices move together, (positive correlation), the volatility of the portfolio will be higher. Higher volatility means higher risk. This is the case with the first economy.
In the second economy however, the stocks are independent of each other meaning there is zero correlation between stocks and hence the portfolio volatility will be much lesser.
As a risk-averse investor you will prefer the portfolio with lower volatility for the same expected return.
Answer:
Flagon Transcontinental Corp.'s board of directors announced that it will pay a $1 million dividend in three months on this date - Declaration Date On the declaration date, the firm announces that it will pay dividends. If the company is large, it pays for a press release on a newspaper, or even, on TV.
Transcontinental Corp. actually sent the dividend checks to stockholders on this date - Payment Date.
Self-explanatory, this is the date on which checks are sent to shareholders who were recorded eligible for payment on the record-date.
Flagon Transcontinental Corp.'s board of directors declared that whoever is listed as the owner of the stock on this date will receive the dividend for this year - Holder-of-Record date.
Also known as the record date, on this date, the firm determines which shareholders will receive the dividend.
Transcontinental Corp.'s board of directors set this date as the date on which the right to the current dividend no longer accompanies the stock - Ex-Dividend Date.
On this date, the value of the next dividend payment is substracted from the stock price. The Ex-Dividend Date is usually the day before the Record-Date, because shareholders that were found uneligible for dividend payment are now the holders of ex-dividend stocks.
