Answer:
c. a claim against a portion of the total assets of an enterprise.
Explanation:
The statement of stockholder's equity comprises common stock, preferred stock, and retained earnings.
The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid
And, the ending balance of the common stock = Beginning balance of common stock + issued shares
In this the accounting equation is used which is shown below:
Total assets = Total liabilities + stockholder equity
The debit and credit side of the balance sheet should always be equal and balanced. So, its claims against the portion of the total assets
Answer: Corporate bond
Explanation:
It should be noted that the municipal bond aren't taxable. Therefore, its yield will be 4.75%.
On the other hand, the After Tax Cost of the yield of the corporate bond will be:
= Yield × (1-Tax Rate)
= 8.25% × (1-35%)
= 8.25% × 65%
= 5.36%
Therefore, the Corporate Bond should be chosen since it has a higher yield.
Answer:
the money multiplier = 1 / reserve ratio
in this case, the reserve ratio is 10% (required) + 10% (voluntary) = 20%, so the money multiplier = 1/20% = 5
What is the immediate impact of this transaction on the money supply?
- None, since the money supply doesn't change. When a customer deposits money in a bank, the money does not increase, only its composition changes.
The maximum amount by which this bank will increase its loans from the transaction in part (a)
- the bank will be able to loan ⇒ total deposit x (1 - reserve ratio) = $9,000 x (1 - 20%) = $7,200
The maximum increase in the money supply that will be generated from the transaction in part
- since the banks started to "create" money by lending the money, the money supply will increase by ⇒ total deposit x (money multiplier - 1) = $9,000 x 4 = $36,000
Assume that the government increases spending by $9,000, which is financed by a sale of bonds to the central bank. Indicate what will happen to the money supply.
- The money supply will increase.
Explain what will happen to the money demand.
- The money demand will also increase because aggregate demand and income will increase. Aggregate demand will increase by ⇒ $9,000 x government multiplier. The government multiplier = 1 / MPS.
Answer:
B
Explanation:
A currency appreciates when its value increases.
For example if $1 was exchanged for 50 pesos. After appreciation of the pesos, $1 would buy $25 pesos.
So more $2 would be needed to buy 50 peso after the appreciation when before the appreciation $1 was buying 50 pesos.
As a result Mexican goods would become more expensive to US consumers and the revenue earned by Mexican producers would increase
