Answer:
D ; increase growth
Explanation:
The discount rate is one of the tools that the Federal Reserve uses to direct monetary policy. Banks are subject to minimum reserves requirements. If a bank falls below this minimum, it can borrow from the banks with a surplus, or borrow from the federal reserve. If it borrows from the Fed, the interest rate that applies is the discount rate. The discount rate is always higher than the fed fund rate; hence, banks use it as a last resort.
The discount rate and the fed rate have similar effects on the economy. The Fed uses the discount rate to regulate the money supply in the country. When the growth in slow, the fed will reduce the discount rate. A low discount rate means the cost of borrowing money goes down. The impact is that individuals and businesses will afford to borrow money for consumption and investment.
Increased levels of investments and consumption will mean a higher GDP, which is growth.
<span>A: to set interest rates</span>
LaRhonda realized and recognized gain or loss are: $45,000; $35,000.
a. LaRhonda realized gain:
Using this formula
Realized gain = (Cash + Fair market value of building + Mortgage) - Adjusted basis
Let plug in the formula
Realized gain = ($15,000 + $50,000 + $20,000) - $45,000
Realized gain = $85,000-$45,000
Realized gain = $40,000
b. LaRhonda recognized gain or loss
Using this formula
Recognized gain = Cash + Mortgage
Let plug in the formula
Recognized gain =$15,000 +$20,000
Recognized gain= $35,000
Inconclusion LaRhonda realized and recognized gain or loss are: $45,000; $35,000.
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Answer:
D. The constant growth model cannot be used for a zero growth stock, where the dividend is expected to remain constant over time.
Explanation:
So, we evaluate each option.
a. We discount the dividends by the required rate of return. So incorrect.
b. The dividend yield is annual dividend per share divided by stick price per share. the 5% is the growth in dividend and not the actual dividend itself. So, incorrect.
c. The constant growth is appropriate for companies whose dividend patterns are stable. Startups have multiple stage growths and this option becomes incorrect as constant growth is not applicable.
d. A zero growth stock is one where dividend remains the same. So when there is no growth in dividend, the constant growth model becomes inapplicable. So, the statement is correct.
So, here we have our correct statement and all others are incorrect.
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