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MakcuM [25]
3 years ago
8

Assume that banks keep 10% of deposits as reserves. Households hold money such that the currency-deposit ratio is 80%. The money

multiplier is given by:________. a. 1.8 b. 2 c. 1.7 d. None of the other answers e. 1.9
Business
1 answer:
Vladimir [108]3 years ago
6 0

Answer:

b. 2

Explanation:

The computation of the money multiplier is shown below:

Money multiplier is

= (1 + currency deposit) ÷ (reserves + currency deposits)

= (1 + 0.80) ÷ (0.10 + 0.80)

= 1.8  ÷ 0.9

= 2

hence, the money multiplier is 2

Therefore the correct option is b. 2

We simply applied the above formula so that the correct value could come

And, the same is to be considered

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3 years ago
Wild Swings Inc.’s stock has a beta of 2.5. If the risk-free rate is 6% and the market risk premium is 7%, what is an estimate o
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Answer:

r = 0.235 or 23.5%

Explanation:

Using the CAPM, we can calculate the required/expected rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.  

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r = 0.235 or 23.5%

3 0
3 years ago
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uysha [10]

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5 0
2 years ago
You gave $770 to your cousin. As a token of gratitude, your cousin gave you $1,190 at the end of the year instead of $770. If yo
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Answer:

annual rate of return  = 54.55%

Explanation:

given data

gave to your cousin present value = $770

cousin give you future value = $1190

solution

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annual rate of return = \frac{future\ value}{present\ value} - 1    ...................1

put here value and we get

annual rate of return = \frac{1190}{770} - 1

solve it we get

annual rate of return  = 54.55%

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3 years ago
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