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devlian [24]
3 years ago
15

The bank you own has the following balance sheet: Assets Liabilities Reserves $75 million Deposits $500 million Loans $525 milli

on Bank capital $100 million If the bank suffers a deposit outflow of $50 million with a required reserve ratio on deposits of 10%, what actions should you take
Business
1 answer:
aliya0001 [1]3 years ago
5 0

Answer:

Explanation:

Calculation of the amount of required reserve as follows:

Required Reserve = Deposit * required reserve ratio

= $500 million * 10%  

= $50 million  

Therefore, the bank must hold $50 million in required reserve.

It currently has $75 million in reserve so this requirement is met.

If the bank suffers a deposit outflow of $50 million

         Assets                                 Liabilities

Reserves - $25 million      Deposits - $450 million

Loans - $525 million         Bank capital - $100 million

So the required reserve is $450 * 10/100 = $45 million.

But in the reserve account we have only 25 million so we are falling short of $20 million. We need to maintain this required reserve so we can take following actions:  1. By borrowing $20 millions from other bank or financial institutions or corporations.  2. We can sell securities of $20 million.  3. We can borrow some money and can raise some money by issuing securities.

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oneycutt Co. is comparing two different capital structures. Plan I would result in 39,000 shares of stock and $108,000 in debt.
Mila [183]

Answer:

All equity plan:

EPS = $160,000 / 42,000 = $3.81

Plan I:

EPS = [$160,000 - ($108,000 x 7%)] / 39,000 = $152,440 / 39,000 = $3.91

Plan II:

EPS = [$160,000 - ($324,000 x 7%)] / 33,000 = $137,320 / 33,000 = $4.16

Plan II is better since the resulting EPS is higher than the other alternatives.

8 0
3 years ago
According to the IS–LM model, if Congress raises taxes but the Fed wants to hold income constant, then the Fed must ______ the m
abruzzese [7]

Answer:

Increase

Explanation:

Population net income consists of the difference between labor income and expenditure. If the government adopts a contractionary fiscal policy, that is, increases taxes, the net income of the population will decrease, since part of the income will be directed to the payment of taxes. For the Fed to compensate for this decline in income, an expansionary monetary policy will have to be adopted, ie the Fed must act to stimulate the population's income. The increase in money supply has the effect of warming the economy in the form of higher demand and higher wages. This is the form of compensation between two different policies, one contractionist and one expansionist.

6 0
3 years ago
A limited liability company that has two or more members can be taxed as a corporation.
Novosadov [1.4K]

It's true a limited liability company that has two or more members can be taxed as a corporation.

Option A) is true.

If you form a multiple-member LLC and do not file a special form with the IRS, the LLC will be taxed as if it were a partnership. You may elect to be treated as an S Corporation by filing IRS Form 2553, Election by a Small Business Corporation.

A multi-member limited liability company is treated as a pass-through entity for federal income tax purposes. As with a sole proprietorship GmbH, this means that the GmbH does not pay its own taxes. Instead, each member pays taxes on the company's income in proportion to their interest in the LLC.

Learn more about limited liability company at

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3 0
2 years ago
Blowing Sand Company has just received a one-time offer to purchase 10,000 units of its Gusty model for a price of $22 each. The
VLD [36.1K]

Answer:

a. Accept the order

b. Increase in short-term profit of $50,000

Explanation:

<em>Note : Blowing Sand has "enough excess capacity" this means that fixed cost will be the same in the range or they will be ocurred whether or not the special order is accepted.</em>

Therefore fixed costs are Irrelevant for this decision.

<u>Incremental Costs and Revenues - accept the special order</u>

Sales ( 10,000 units × $22 each)                               $220,000

<em>Less</em> Variable Costs ( 10,000 units × $17each)         ($170,000)

Net Income                                                                  $50,000

The special order will result in an increase in short term profit of $50,000. Therefore, Blowing Sand Company should accept the order.

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