All categories

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.

You might be interested in

American Bank quotes a bid rate of $0.026 and an ask rate of $0.028 for the Indian rupee (INR); National Bank quotes a bid rate

Vinvika [58]

Answer:

c. buying rupees from National Bank at the ask rate and selling them to American Bank at the bid rate.

Explanation:

Locational arbitrage is a strategy in which one seeks profits from the difference in exchange rates for the same currency at different banks.
In our case for locational arbitrage one will have to buy Indian rupee from National bank at the ask rate and then sell them to American bank at the bid rate to make profit.

3 0

3 years ago

Wayne worked in an office. He had no criminal record, had never had a complaint made against him about his work or his conduct,

boyakko [2]

Answer:

A) there was no way to foresee that the incident would happen.

Explanation:

Wayne hadn't done anything wrong before in the company, his behavior at the workplace could be described as very good; no complaint in 20 years and no criminal record what so ever. If Wayne was frustrated about his job, he disguised it very well. No one can predict this type of behavior if the person shows no prior signs of violence or frustration.

6 0

3 years ago

Halestorm Corporation’s common stock has a beta of 1.20. Assume the risk-free rate is 4.5 percent and the expected return on the

Lemur [1.5K]

Answer:

Ke = Rf + β(Rm – Rf)

Ke = 4.5 + 1.20(12-4.5)

Ke = 4.5 + 9

Ke = 13.5%

Explanation:

Cost of equity is equal to risk-free rate plus market risk premium. Market risk premium is beta multiplied by risk premium. Risk premium is market return minus risk-free rate.

8 0

3 years ago

The common stock of the P.U.T.T. Corporation has been trading in a narrow price range for the past month, and you are convinced

konstantin123 [22]

Answer:

A) according to put call parity:

price of put option = call option - stock price + [future value / (1 + risk free rate)ⁿ]

put = $6.93 - $125 + [$140 / (1 + 5%)¹/⁴] = $6.93 - $125 +$138.30 = $20.23

you have to purchase both a put and call option ⇒ straddle

the total cost of the investment = $6.93 + $20.23 = $27.16, this way you can make a profit if the stock price increases higher than $125 + $20.23 = $145.23 or decreases below than $125 - $20.23 = $104.77

4 0

3 years ago

Gipple Corporation makes a product that uses a material with the quantity standard of 7.3 grams per unit of output and the price

noname [10]

Answer:

C) $300 U

Explanation:

Gipple Corporation

Material Quantity Variance = (Actual Quantity Used * Standard Unit Cost )-

( Standard Quantity Used * Standard Unit Cost )

Material Quantity Variance =(AQ* SP) -(SQ*SP)

Material Quantity Variance = (24,870* 6)- ( 7.3* 3400 *6)

Material Quantity Variance = (24,870* 6)- (24,820* 6)

Material Quantity Variance = 149220 - 148920

Material Quantity Variance = $300 Unfavorable

As actual quantity is greater than standard quantity it is unfavorable.

4 0

2 years ago