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VladimirAG [237]
3 years ago
6

Explain why a single commercial bank can safely lend only an amount equal to its excess reserves but the commercial banking syst

em can lend by a multiple of its excess reserves. What is the monetary multiplier, and how does it relate to the reserve ratio?
Business
1 answer:
Savatey [412]3 years ago
4 0

Answer:

A single commercial bank cannot lend more than its reserves because if checks are written for a higher amount than those reserves, the commercial bank will lose its reserves.

On the other hand, in a fractional reserve system, the system as a whole cannot lose reserves because they are backed up by other banks.

Finally, the relationship between the monetary multiplier and the reserve ratio is inversely proportional. If the reserve ratio goes up, the money multiplier will go down because banks will have less money available to loan, and therefore, will create a lesser amount of money.

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Which of the following business combinations is a vertical integration? A. The corner gas station buys the competitor across the
drek231 [11]

Answer:

  C. The corner gas station acquires the gasoline distributor to ensure they can get gas in times of shortages.

Explanation:

Vertical integration is the situation where the same company owns both the sources of supply and the distribution (retail) outlets. The description of (C) matches this definition.

4 0
3 years ago
The role of finance in healthcare has increased in importance over time because the finance function must support a multitude of
kumpel [21]

Answer:

True

Explanation:

The finance function is a shared function, it supports almost all the sections in a business enterprise. the role of finance in health cuts across all departments.

In the area of cost containment, the finance unit is the cost leader, it is the unit that lead and drive any cost control measure in an organization and healthcare sector is an exception.

The finance section participates directly and also provides the financial data that helps in negotiating with suppliers and demanding for various kinds of discounts and rebates.

The finance role in Joint venture activities cannot be over emphasized, it is the unit that keeps record of transactions and measure the profit or loss from the venture and advise management on the appropriate course of action.

The budget and budgetary control that drives operation of the heath sector is handled by the finance unit.

3 0
3 years ago
Tickets for the historical review of ballroom dancing at the Portsmouth Music Hall cost $42 for the main-floor seats and $25 for
const2013 [10]

Answer:

(a) The cost in dollars of all the main-floor seats that were sold: 42m + 25b. (b) The total number of seats that were sold for the performance: m+b.

Explanation:

Its understood that 1 tickect is equal to 1 seat, therefore the number of seats = number of tickets regardless of the type of seat. With this assumption, the algebraic expressions can be done.

7 0
3 years ago
Suppose that there are many stocks in the security market and that the characteristics of stocks A and B are given as follows: S
Tomtit [17]

Answer:

0.135 or 13.5%

Explanation:

Given in the question are the following:

ERA = Expected return of Stock A = 12% = 0.12

ERB = Expected return of Stock B = 19% = 0.19

SDA = Standard deviation of Stock A = 3% = 0.03

SDB = Standard deviation of Stock B = 9% = 0.09

CAB = Correlation between A and B = -1

The correlation of -1 between Stock A and Stock B indicates that there a perfect negative correlation between the two stocks. Therefore, we can create a risk-free portfolio which its rate of return will be the risk-free rate in equilibrium.  

If we let wA denotes the proportion of investment in Stock A, and let wB denotes the proportion of investment in Stock B, the proportion of this portfolio can be obtained by setting its standard deviation equal to zero. Since there is a perfect negative correlation, the standard deviation of this portfolio (SDP) can be given as follows:

Absolute value [(wA × SDA) – (wB × SDB)] = SDP …………………………………….. (1)

Note that wB = (1 – wA) since the sum of the weight must be equal to 1.

Substituting all the relevant values into equation and set SDP = 0, we have  

[(0.03 × wA) − (0.11 × (1 - wA))] = 0

0.03wA – 0.11 + 0.11wA = 0

0.03wA + 0.11wA = 0.11

0.14wA = 0.11

wA = 0.11 ÷ 0.14 = 0.785714285714286

Since wB = 1 –wA, therefore:

wB = 1 - 0.785714285714286 = 0.214285714285714

The expected rate of return of the portfolio (ERP) can be estimated as follows:

ERP = (wA × ERA) + (wB × ERB)  ................................. (2)

Substituting all the relevant values into equation (2), we have:

ERP = (0.785714285714286 × 0.12) + (0.214285714285714 × 0.19)  

       = 0.0942857142857143 + 0.0407142857142857

ERP = 0.135 or 13.5%

Therefore, the value of the risk-free rate must be 13.5%.

4 0
3 years ago
Ivory is listening to a manager present statistics that they believe supports a new initiative. Which type of critical thinking
ioda

The type of Critical Thinking Questions that Ivory should ask at this point are:

  • What are the assumptions?
  • what are the issues and the conclusions?
  • Are there fallacies in the reasoning?
  • How authentic is the data presented?

<h3>What are Critical Thinking Questions?</h3>

Critical  Thinking Questions are questions that make inquiries into the veracity of a claim.

They help the evaluator to maintain a logical and rational line of thoughts so that they are able to connect clearly the relationship between facts and ideas.

Learn more about Critical Thinking Questions at:
brainly.com/question/6034421

3 0
2 years ago
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