Answer:
(a) $15
(b) $35
(c) 4
(d) $80
Explanation:
Given that,
Initial deposit = $20 bill
Required reserve ratio = 25%
(a) Money lend out by bank is as follows:
= Amount of deposit - Reserve requirement
= $20 - ($20 × 0.25)
= $20 - $5
= $15
(b) Money in the economy changed:
= Initial deposit + Amount of money lend out by bank
= $20 + $15
= $35
(c) Money multiplier:
= 1/ Required reserve ratio
= 1/ 0.25
= 4
(d) Money will eventually be created by the banking system:
= Change in deposits × Money multiplier
= $20 × 4
= $80
Answer:
The price of a 6-month call option on C.A.L.L. stock is $13.52
Explanation:
According to the given data we have the following:
P = Price of 6-months put option=$10.50.
So = Current price=$125
X = Exrecise price=$125
r = Risk free interest rate= 5%
T = Time 6 months = 1/2
In order to calculate the price of a 6-month call option on C.A.L.L. stock at an exercise price of $125 if it is at the money, we would have to use the formula of put-call parity as follows:
C=P+So- (<u> X )</u>
( 1+r)∧T
C=$10.50+$125-(<u>$125 )</u>
(1+0.05)∧1/2
C=$135.5-121.98
C=$13.52
The price of a 6-month call option on C.A.L.L. stock is $13.52
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Answer:
D. The marginal cost of light is zero, and by convention zero-priced goods and services are excluded from GDP
Explanation:
Only things that have a monetary cost are included in GDP. Things that do not cost "anything" in monetary terms are not included, and this is a major shortcoming of GDP.
From an ecological economics standpoint, things like sunlight, air, and water are often not valued and included in GDP. This is the same case as in the question, because the marginal cost of light is zero, then, it is not included in GDP.
Answer:
(i) $133.12
(ii) $297.6
(iii) $300.8
(iv) $301.6
Explanation:
From the compounding formula;
Future value = Present value 
where r is the rate, m is the number of payment per year, and n is the number of years.
Interest = future value - present value
Given that present value = $800, r = 8%, n = 4 years.
(i) annually,
m = 1, so that;
Future value = 800
= $933.12
Interest = $933.12 - $800
= $133.12
(ii) quarterly,
m = 3, so that;
Future value = 800
= 800(1.372)
= $1097.6
Interest = $1097.6 - $800
= $297.6
(iii) monthly,
m = 12, so that;
Future value = 800
= 800(1.376)
= $1100.8
Interest = $1100.8 - $800
= $300.8
(iv) weekly,
m = 54, so that;
Future value = 800
= 800(1.377)
= $1101.6
Interest = $1101.6 - $800
= $301.6
