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lyudmila [28]
3 years ago
13

In​ Keynes's analysis of the speculative demand for​ money, what will happen to money demand if people suddenly decide that the

normal level of the interest rate has​ declined? Why?
A. Money demand will increase because people will want to borrow more money.
B. Money demand will stay the same because the speculative component of the demand for money is viewed as insensitive to interest rates.
C. Money demand will decrease because as interest rates​ fall, the price of bonds rises. The relative increase in the expected return on bonds makes money less attractive.
D. Money demand will increase because as interest rates​ fall, the price of bonds falls. The relative decrease in the expected return on bonds makes money more attractive.
Business
1 answer:
Serggg [28]3 years ago
4 0

Answer:

The correct answer is option C.

Explanation:

When the interest rate falls below the normal level, people expect the interest rates to rise in future and bond prices to fall. This causes investors to sell the bonds at present so that they can buy bonds when they are selling at lower prices in future as of result of an increase in interest rates. Money demand will, as a result, will decrease.

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3 years ago
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Brandon, the general manager of Pelantis International Hotel, promises Theodore, the director of marketing and sales of the hote
NISA [10]

Answer:

Transactional leadership

Explanation:

This leadership involves an exchange process whereby followers get immediate and tangible rewards for carrying out the leader’s orders. The leader can clarify what is expected of followers´ performance explaining how to meet such expectations and allocating rewards that are contingent on meeting objectives.

4 0
3 years ago
The more conservative a firm's management is, the higher its total debt to total capital ratio [measured as (Short-term debt Lon
PtichkaEL [24]

Answer:

False

Explanation:

The conservative approach is that the firm has greater level of working capital investment than the competitor or industry average. So to fund the higher level of working capital the company has a set of policy and targets related to the level of debt level which means the company will not be willing to borrow further money if their borrowing exceeds the set limit or benchmark. They might use the equity instruments (Preferred stock or Common equity) to fund the higher level of working capital.

So their no absolute argument whether the denominator will increase or the nominator will increase in the Total debt to capital ratio. Hence the statement is false.

8 0
3 years ago
1. B. Journalize the transactions for May, starting on Page 20 of the journal.*
jeyben [28]

Answer:

Rent Expense (Dr.) $5,000

Cash (Cr.) $5,000

Inventory (Dr.) $35,380

Accounts Payable Martin Co. (Cr.) $35,380

Accounts Receivable Korman Co. (Dr.) $62,000

Sales (Cr.) $62,000

Cost of Goods Sold (Dr.) $48,500

Inventory (Cr.) $48,500

Explanation:

Advertising Expense (Dr.) $21,800

Cash (Cr.) $ 21,800

Cash (Dr.) $62,000

Accounts Receivable Korman Co. (Cr.) $62,000

Customer Refund Payable (Dr.) $31,500

Cash (Cr.) $31,500

Sales Salaries Expense (Dr.) $12,000

Office Salaries Expense (Dr.) $ 38,000

Cash (Cr.) $50,000

Store Supplies Expense (Dr.) $2,200

Cash (Cr.) $2,200

8 0
3 years ago
A portfolio manager has a large position in the preferred stock of XYZ Corporation. The manager is concerned that market interes
Ksivusya [100]

Answer:

To hedge the preferred stock position, the manager should: Buy tyx calls

Explanation:

When market interest rate rise preferred stock drop. To hedge using interest rate index option, <em>the contract must offer an offsetting profit during a period of rising interest rates. Therefore buy TYX calls. </em>These will continue to give ever increasing profit as market interest rate continue to rise. And it will offset the ever increasing loss that would be incurred on the XYZ preferred stock position as the market interest rate continues rising.

The hedge is that Any loss on preferred stock position would be offset by corresponding gain on the long interest rate index call position.

5 0
3 years ago
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