Answer:
The correct answer is b. right, raising the price level.
Explanation:
The balance of the money market or money market is the market point that occurs as a result of the crossing of the money supply with the money demand. As a result of this equivalence, we will obtain the level of optimal interest rates in the short term.
The demand for money is defined as the proportion of wealth that people want to keep in the form of money. However, the money supply is defined as cash held by the public plus deposits held in bank accounts.
Answer:
Milton should buy the company
Explanation:
Comparing the intrinsic value of the company in both scenarios using the Gordon Growth Model we get:
PV = [D0 * (1 + g)] / (r - g) where
D0 is current dividend
g = growth rate
r = required rate of return
Case 1 = current
PV = 1.7 * (1 + 0.05) / (0.11 - 0.05)
PV = 29.75
Case 2 = buying company
PV = 1.7 * ( 1 + 0.065) / ( 0.12 - 0.065)
PV = 32.92
The present value of the share when buying the company is higher than the current present value, therefore Milton should go ahead buying the company.
Answer: $121
Explanation:
The question simply wants us to find the present value of receiving $100 investment two years from now at a 10 percent annual discount rate.
This can be easily solved as follows:
For the first year, the $100 will be worth:
= $100 + ($100 × 10%)
= $100 + ($100 × 0.1)
= $100 + $10
= $110
The worth at the end of the second year will then be:
= $110 + ($110 × 10%)
= $110 + $11
= $121