Answer:
Since the expected return and required return are different for both Stock X and Z, we say that they are not correctly priced
Explanation:
<em>To determine whether or not the stocks are correctly priced ,</em>
<em>we have to compare the r</em><em>equired return</em><em> and the </em><em>expected return on each of them.</em>
Required return = Rf +β (Rm-Rf)
Note that Rm-Rf is also known as market risk premium
<em>Stock Y Stock Z</em>
<em>Required return </em> 2.4% + 1.2(7.2%) 2.4% + 0.8(7.2%)
= 11% = 8.2%
<em>Expected return</em> <em>12.1% 7.85%</em>
Since the expected return and required return are different for both Stock X and Z, we say that they are not correctly priced
Answer:
D. especially large and sustained government borrowing
Explanation:
When a government spends more than it collects in taxes, it runs a budget deficit. When the government starts borrowing large sums too much, it can substantially facilitate the reduction in the financial capital available to private sector firms, as well as lead to trade uncertainties and even financial crises.
Answer:
what is the money multiplier?
what is the total change in the M1 Money Supply?
- Just because a client deposits money into a bank it does not increase M1, it just changes its composition. The immediate effect of the deposit in the total money supply is nothing. If the bank loans the money to other clients ($581 in total loans are possible), and other clients deposit the funds in the same bank or other banks, then the money supply could increase up to $3,416.
what is the minimum amount by which the money supply will increase?
- If the bank loans the disposable funds, the money supply should increase by $581 at least.
Explanation:
The bank's required reserve ratio = reserves / deposits = $493 / $2,900 = 0.17 or 17%.
the money multiplier = 1 / required reserve ratio = 1 / 0.17 = 5.88
if a client deposits $700, the minimum amount by which the money supply will increase = $700 x (1 - required reserve) = $700 x (1 - 0.17) = $700 x 0.83 = $581
the maximum amount by which the money supply could increase = ($700 x 5.88) - $700 = $4,116 - $700 = $3,416
Answer: $0 equipment, $20,000 land, $30,000 inventory, $90,000 partnership interest.
Explanation: The asset basis in the partnership between Xena and Xavier is the same same their basis. In the scenario above, Xena's basis is the same as Xena's partnership basis in asset.
Xena's asset basis include;
Cash = $20,000
Land basis = $40,000
Inventory basis = $30,000
Equipment basis = $0
Therefore Xena's basis in the partnership interest :
$(20,000 + 40,000 + 30,000 + 0) = $90,000
