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2 years ago

The desired reserve ratio is 10 percent of deposits, and the currency drain ratio is 1 percent of deposits.

Business

1 answer:

Flauer [41]2 years ago

4 0

Answer:

Quantity of money changes by $50,000,000

Explanation:

Desired reserve ratio = 10% = 0.1

Currency drain ratio = 1% = 0.01

Money multiplier = (1+0.1) / (0.1+0.01) = 1.1/ 0.11 = 10

Value of securities purchased = $5 million

Change in quantity of money :

$5 million * 10 = $50 million

Currency created : currency drain ratio * change in quantity of money

0.01 * $50,000,000 = $500,000

Amount of bank deposit = quantity change - currency created

= $50,000,000 - $500,000 = $4,500,000

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In the primary market investors buy securities directly from the company issuing them while the secondary market, investors trade securities among themselves, and the company with the security being traded does not participate in the transaction. Therefore, an example of a primary market transaction would be the sale of 1000 shares of newly issued stock by Alt Company to Miquel.

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3 years ago

Montross Lumber processes wood to be shipped to construction companies. In order to keep its products uniform, Montross conducts

tiny-mole [99]

Answer:

$450

Explanation:

Activity based costing is the process by which a business allocates cost on the basis of the number of times an activity is carried out.

For example if different departments use a photocopier to copy 3,000, 5,000, and 2,000 sheets. The total cost will be allocated based on amount of activity per department.

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Total cost of inspection= Cost per hour * Number of hours

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3 years ago

Assume that in a private, closed economy consumption is $240 billion and investment is $50 billion, both at the $280 billion lev

adell [148]

Answer:

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Explanation:

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3 years ago

Credit risk measures using the structural model: assume a company has the following characteristics.

Alexeev081 [22]

Answer:

a ) Probability of default of debt over the time to maturity is 12.92%

(b ) Expected loss: $39.53

(C ) Present value of expected loss is $45.59

Explanation:

a ) Probability of default of debt over the time to maturity is 12.92%

(b ) Expected loss: $39.53

(C ) Present value of expected loss is $45.59.

Values calculated as shown in my detailed step by step answer at the attachment.

please kindly refer to attachment.

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3 years ago

Direct Materials, Direct Labor, and Factory Overhead identify the following costs as direct materials, direct labor, or factory

Alexeev081 [22]

Answer:

a. Staples used to bind magazines - Direct Material

The staples are integral to holding the magazines so is a direct material.

b. Wages of printing machine employees. - Direct Labor

The printing machine employees are directly related to the magazine's production as they print it.

c. Maintenance on printing machines. - Factory Overhead

This cost is not directly associated with the publishing of the magazine so is an overhead.

d. Paper used in the magazine. -Direct Material

Without paper, the magazine can not be published which makes it a direct material.

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3 years ago