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3 years ago

According to liquidity preference theory investment spending would rise if the price level

Business

1 answer:

ANTONII [103]3 years ago

4 0

Answer:

A.rose making the interest rate fall

Explanation:

According to the liquidity preference theory developed by John Keynes, if the money supply rises, price level also rises, interest rate falls. If interest rate falls, the price of bond rises which would increase capital gains. People would prefer to hold bonds instead of money, therefore, investment spending would rise.

The liquidity preference theory states that we hold money for transactive, speculative and precautionary motives.

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Ramses Corporation produces a product that passes through two processes. During April, the first department transferred 19,000 u

hram777 [196]

Answer: See explanation

Explanation:

A. The number of units started in the second department during April will be the number of units that is transferred in from the first department. This will be

= 19000 units

B. The number of units completed in the second department during April will be:

= Beginning units + Started Unit - Ending units

= 4000 + 19000 - 5500

= 17500 units

C. The number of units started and completed in the second department during April will be:

= Completed units - units in beginning WIP

= 17500 – 4000

= 13500 units.

3 0

3 years ago

Microhard has issued a bond with the following characteristics: Par: $1,000 Time to maturity: 21 years Coupon rate: 9 percent Se

kifflom [539]

Microhard has issued a bond with the following characteristics: Par: $1,000 Time to maturity: 21 years Coupon rate: 9 percent Semiannual payments Calculate the price of this bond if the YTM is 6% (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.):

Answer:

Price of bond = $982.63

Explanation:

The value of the bond is the present value (PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).

Value of Bond = PV of interest + PV of RV

The value of bond for Microhard can be worked out as follows:

Step 1

PV of interest payments

Semi annul interest payment

= 9% × 1000 × 1/2 = 45

Semi-annual yield = 6%/2 = 3 % per six months

Total period to maturity (in months)

= (2 × 21) = 42 periods

PV of interest =

45 × (1- (1+0.03)^(-21)/0.03)= 693.6

Step 2

PV of Redemption Value

= 1000 × (1.03)^(-21×2) =288.95

Price of bond

= 693.6 + 288.95 =982.63

Price of bond = $982.63

4 0

3 years ago

g Call options on IBM-listed stock options are Group of answer choices created by investors and traded on various exchanges. iss

Scorpion4ik [409]

Answer: Created by investors and traded on various exchanges

Explanation:

Call options are contracts that give the buyer the right to buy the underlying assets of the option on a particular date at a set price by exercising the option. American Call options can be exercised anytime before the date listed in the contract as well.

Call options are created by people who already own stock in the company i.e investors in IBM and traded on various exchanges such as the Chicago Board Options Exchange. It acts as a supplementary way to make income from stock if the investors do not believe that the stock price will go up thus enabling them to make income from the contract price.

8 0

3 years ago

promissory note received from a customer in exchange for an account receivable is recorded by the payee as

luda_lava [24]

Answer: Note Receivable

Explanation:

A Note Receivable is a written document from a party promising to repay another party with interest on amounts borrowed in form of cash or otherwise thereby creating a debtor - creditor relationship between them.

When a promissory note is received from a customer in exchange for an accounts receivable it is a Note Receivable and the Payee being the creditor will record it as such.

4 0

3 years ago

A nonprofit government corporation is considering two alternatives for generating power. The useful life of both alternatives is

kondaur [170]

Answer:

Note The full question is attached as picture below

a. B-C ratio = Equivalent annual worth of Benefits / Equivalent annual worth of costs

Alternative A

B-C ratio = Equivalent annual worth of Benefits for alternative A / Equivalent annual worth of costs for alternative A

B-C ratio = (Power Sales + Annual benefits from new industry) / ((Capital cost * Annuity factor(5%,50 years)) + Operating and maintenance costs costs)

B-C ratio = ($1,000,000 + $500,000) / (($20,000,000*(0.05 / (1 - 1.05^(-50))) + $200,000)

B-C ratio = ($1,500,000 / ($1,095,534.71 + $200,000))

B-C ratio = $1,500,000 / $1,295,534.71

B-C ratio = 1.1578

B-C ratio = 1.16

Alternative B

B-C ratio = Equivalent annual worth of Benefits for alternative B / Equivalent annual worth of costs for alternative B

B-C ratio = (Power Sales + Sum of all Annual benefits) / ((Capital cost*Annuity factor (5%,50 years)) + Operating and maintenance costs costs)

B-C ratio = ($800,000 + $600,000 + $400,000 + $200,000 + $100,000) / ($30000000 *(0.05/(1-1.05^(-50))) + $100,000)

B-C ratio = $2,100,000 / ($1,643,302 + $100,000)

B-C ratio = 1.2046

B-C ratio = 1.20

Conclusion: Alternative B should be selected because it has higher B/C ratio.

b Incremental B-C ratio for final pair = (Equivalent Annual Benefits of B - Equivalent Annual Benefits of A) / (Equivalent annual costs of B - Equivalent annual costs of A)

Incremental B-C ratio for final pair = ($2,100,000 - $1,500,000) / ($1,743,302 - $1,295,534.71)

Incremental B-C ratio for final pair = $600,000 / $447,767.29

Incremental B-C ratio for final pair = 1.339982

Incremental B-C ratio for final pair = 1.34

3 0

3 years ago