Answer:
The total gains from trade are <u>4</u> dishes of pasta and <u>4</u> pizzas an hour.
Explanation:
Before specialization, Mia and Mario each produced 4 dishes of pasta and 4 pizzas per hour. After specialization, Mia is able to produce 12 dishes of pasta, and Mario is able to produce 12 pizzas per hour.
After specialization and trade, the total maximum combined output per hour is 12 dishes of pasta and 12 pizzas. Before specialization, the total maximum combined output per hour was 8 dishes of pasta and 8 pizzas. So the net gain of specialization and trade is 4 dishes of pasta and 4 pizzas per hour.
Answer:
Midwestern Mutual Bank's Balance Sheet
Equity:
Owners' Equity - $100
Liabilities:
Deposits $1,200
Debts $200
Total - $1,400
Equity and Liabilities = $1,500
Assets:
Reserves - $150
Loans $600
Securities $750
Total Assets - $1,500
a) If a new customer adds $100 to his account, this would increase the loans account with $100 and the deposits account with $100.
b) The leverage ratio is the measure of the bank's core capital to total assets.
Old leverage ratio = 100 / 1500 x 100% = 6.67%
The new leverage ratio is 100 / 1600 x 100% = 6.25%.
c) The intended goal of capital requirement is protect the interests of those who hold equity in the bank.
Explanation:
Banks are highly leveraged. This means that they usually maintain high leverage ratios. The liabilities are always much compared to the capital.
Leverage ratio is the ratio of a bank's core capital (shareholders equity) to its total assets.
This is why the Federal Reserve introduces capital requirements for banks. This tries to protect shareholders' equity that is usually written down when leverage ratios increase. This is because the capital portion of assets to which the debts are tied can be written down, but the debts cannot.
Answer: $69,959
Explanation:
The amount of interest expense, that Corso will record on December 31, 2019, the company’s fiscal year end will be calculated thus:
First, we calculate the present value of payment which will be made on September 30,2020 and this will be:
= $1000000 × 0.857339
= $857339
Then, the interest expense on December 31,2018 will be:
= $857339 × 8%/12 × 3
= $17147
Therefore, the Interest expense on December 31,2019 will be:
= ($857339 + $17147) × 8%
= $874486 × 0.08
= $69959
Answer: The dividend payout ratio is 46.19%.
We follow these steps in order to arrive at the answer:
We begin with the DuPont identity of RoE.
<u>DuPont Identity:</u>
Now,
And Debt Ratio is also expressed as:
where D/E represents the Debt-Equity Ratio.
Substituting the value of D/E ratio from the question in the debt ratio formula above we get,
----(1)
Substituting (1) in the equity multiplier formula above we get,
Substituting Equity Multiplier from above and the relevant numbers from the question in the DuPont identity we get,
The relationship between RoE and earnings growth rate g is given by the following formula:
, where p is the dividend payout ratio.
Plugging in the values in the formula above we get,
p = 0.461988304 or 46.19%
Answer:
option (d) $929.42
Explanation:
Data provided in the question:
Coupon bonds payments = 5.65% semiannual
Yield to maturity, r = 6.94% = 0.0694
Face value = $1000
Now,
Coupon bond payments = 
× $1,000
= $28.25
market price per bond = Payment × 
+ 
Here,
n is the maturity period and 2n is due to the semiannual payments
Thus,
market price per bond = $28.25 × 
+ 
= $28.25 × 10.942 + 620.3
= $929.42
Hence,
The answer is option (d) $929.42
