Answer:
a. The Federal Reserve chooses how much banks lend. FALSE.
Banks get the choose how much they lend out to people but the Fed can limit their loanable funds by imposing a required reserve. When it comes to the individual amounts the bank can loan out however, the Fed has no control.
b. The Federal Reserve serves as a lender of last resort. TRUE.
As the Central Bank system of the United States, the Fed acts as a lender of last resort for banks.
c. The Federal Reserve loans money to banks. TRUE.
The Fed can loan out money to banks and it does so at the Discount rate.
d. The Federal Reserve sets a target for the federal funds rate. TRUE
One of the duties of the Fed is to set a target for the Federal funds rate which is the rate that banks use to borrow money amongst themselves overnight.
e. The federal funds rate matters only to banks. FALSE.
The federal funds rate affect the entire financial system because it can affect the cost of borrowing which can either increase the amounts people borrow or decrease it.
State with brief reason whether the following statements are true, false, or uncertain:a. In the presence of heteroscedasticity OLS estimators are biased as well as inefficient.b. If heteroscedasticity is present, the conventional t and F tests are invalid.c. In the presence of heteroscedasticity the usual OLS method always overestimates the standard errors of estimators.d. If residuals estimated from an OLS regression exhibit a systematic pattern, it means heteroscedasticity is present in the data.e. There is no general test of heteroscedasticity that is free of any assumption about which variable the error term is correlated with.f. If a regression model is mis-specified (e.g., an important variable is omitted), the OLS residuals will show a distinct pattern.g. If a regressor that has nonconstant variance is (incorrectly) omitted from a model, the (OLS) residuals will be heteroscedastic.
Answer:
Explanation:Djrjjrjrhe
In the presence of heteroscedasticity OLS estimators are biased as well as inefficient is a FALSE statment.
What is heteroscedasticity?If every variable in a sequential manner has the same finite variance, the succession is homoscedastic. Another name for this is the homogeneity of volatility. Heteroscedasticity is the equivalent concept. Along these used forms include homoskedasticity as well as heteroskedasticity.
b. If heteroscedasticity is present, the conventional t and F tests are invalid in a TRUE statment.
c. In the presence of heteroscedasticity the usual OLS method always overestimates the standard errors of estimators as a FALSE statment.
D. If residuals estimated from an OLS regression exhibit a systematic pattern, it means heteroscedasticity is present in the data is a FALSE statment.
e. "There is no general test of heteroscedasticity that is free of any assumption about which variable the error term is correlated with.f. If a regression model is misspecified (e.g., an important variable is omitted), the OLS residuals will show a distinct pattern.g. If a regressor that has nonconstant variance is (incorrectly) omitted from a model, the (OLS) residuals will be heteroscedastic" is a TRUE statment
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Martin owns his own motorcycle and ATV store and operates as a small business. He notices that many of his customers talk about golf while in his store. He quickly adds golf carts and golf clubs to his merchandise selection. Rapidly adjusting to the needs of his customers is possible because small businesses
Suppose that the coupon rate for a TIPS is 4%. Suppose further that an investor purchases $50,000 of par value initial principal) of this issue today.
(1) What is the dollar coupon interest that will be paid in cash at the end of the first six months if the current rate of inflation is 3.25%?
(2) What is the dollar coupon interest that will be paid in cash at the end of the first year if the rate of inflation increases to 3.75% six month later?
Answer:
1. $1,016.25
2. $1,035.30
Explanation:
Dollar coupon interest = Par value * (1+inflation/2)*coupon rate/2
1. Dollar coupon interest = 50000* (1+3.25%/2)*4%/2
Dollar coupon interest = 50,000*(1+3.25%/2)*4%/2
Dollar coupon interest = 50,000*1.01625*0.02
Dollar coupon interest = $1,016.25
2. Dollar coupon interest = 50,000*(1+3.25%/2)*(1+3.75%/2)*4%/2
Dollar coupon interest = 50,000*1.01625*1.01875*0.02
Dollar coupon interest = 1035.3046875
Dollar coupon interest = $1,035.30
The Distance Plus partnership has the following capital balances at the beginning of the current year: Tiger (40% of profits and losses) $ 150,000 Phil (30%) 120,000 Ernie (30%) 135,000 Each of the following questions should be viewed independently.
Required:
a. If Sergio invests $190,000 in cash in the business for a 20 percent interest, what journal entry is recorded?
b. If Sergio invests $100,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the bonus method is used.
c. If Sergio invests $102,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the goodwill is used.
Answer:
A. Total Capital After Investment = 150000+120000+135000+190000 = 595000
Sergio's Share = 595000*20% = 119000
Bonus Distributed to Existing Partners = 190000 - 119000 = 71,000
Journal Entry
Particulars Debit Credit
Cash 190,000
Sergio, Capital 119,000
Tiger, Capital (71,000*40%) 28,400
Phil, Capital (71,000*30%) 21,300
Ernie, Capital (71,000*30%) 21,300
B. Total Capital After Investment = 150000+120000+135000+100000 = 505000
Sergio's Share = 505000*20% = 101000
Bonus Taken from Existing Partners = 101000 - 100000 = 100
Journal Entry
Particulars Debit Credit
Cash 100000
Tiger, Capital (1000*40%) 400
Phil, Capital (1000*30%) 300
Ernie, Capital (1000*30%) 300
Sergio, Capital 101000
C. Total Capital After Investment = 150000+120000+135000+102000 = 507000
Implied Value of Business = 102000/20% = 510000
Goodwill = 510000 - 507000 = 3000
Journal Entry
Particulars Debit Credit
Goodwill 3000
Tiger, Capital (3000*40%) 1200
Phil, Capital (3000*30%) 900
Ernie, Capital (3000*30%) 900
Journal Entry
Particulars Debit Credit
Cash 102000
Sergio, Capital 102000
Park Co. is considering an investment that requires immediate payment of $21,530 and provides expected cash inflows of $6,500 annually for four years. Assume Park Co. requires a 7% return on its investments.
What is the internal rate of return?
Answer:
8.00%
Explanation:
The internal rate of return is the rate of return on the investment which gives a zero net present value.
IRR can be computed using excel IRR function as shown below:
=IRR(values)
values are the cash flows arranged from the earliest( year zero ) to the latest (year 4) as contained in the attached.
IRR=8.00%
The IRR is proven thus:
NPV=-$21,530+$6500/(1+8%)^1+$6500/(1+8%)^2+$6500/(1+8%)^3+$6500/(1+8%)^4=-$1.18(which is very close to zero)
The Dewey Corporation has the following data, in thousands. Assuming a 365-day year, what is the firm's cash conversion cycle?
Annual sales =
Annual cost of goods sold =
Inventory =
Accounts receivable =
Accounts payable = $45,000
$31,500
$4,000
$2,000
$2,400
a. 25 days
b. 28 days
c. 31 days
d. 35 days
e. 38 days
Answer:
d. 35 days
Explanation:
Cash conversion cycle = Average inventory/ (COGS/365) + Average account receivables/(Credit sales/365) - Average account payable / (COGS/365)
Cash conversion cycle = 4,000 / (31,500/365) + 2,000/(45,000/365) - 2,400/(31,5000/365)
Cash conversion cycle = 4,000/86.3014 + 2,000/123.2877 - 2,400/86.3014
Cash conversion cycle = 46.3492 + 16.2222 - 27.8095
Cash conversion cycle = 34.7619
Cash conversion cycle = 35 days
Based on the information given Cash conversion cycle is d. 35 days.
Cash conversion cycle = Days in Inventory + Days in Receivables – Days in payables
Cash conversion cycle = Inventory/Cost of Goods sold×365 + Accounts receivables/Annual Sales×365 – Accounts payable/Cost of goods sold×365
Let plug in the formula
Cash conversion cycle= 4,000 /31,500×365+ 2,000/45,000×365 - 2,400/31,5000×365)
Cash conversion cycle = 46.3492 + 16.2222 - 27.8095
Cash conversion cycle = 34.7619
Cash conversion cycle = 35 days (Approximately)
Inconclusion Cash conversion cycle is d. 35 days.
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Moerdyk Corporation's bonds have a 15-year maturity, a 7.25% semiannual coupon, and a par value of $1,000. The required rate of return is 6.2%. Based on semiannual compounding, What is the market price of a bond?
Answer:
Bond price= $1,101.59
Explanation:
Giving the following information:
Time= 15*2= 30 semesters
Par value= $1,000
Rate of return= 0.062/2= 0.031
Cupon= (0.0725/2)*1,000= $36.25
To calculate the value of the bond, we need to use the following formula:
Bond Price= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]
Bond price= 36.25*{[ 1 - (1.031^-30)] / 0.031} + [1,000/(1.031^30)]
Bond price= 701.42 + 400.17
Bond price= $1,101.59
A restructuring of operations that ____ the difference between a foreign currency's inflows and outflows may ____ economic exposure.
A. reduces; increase
B. increases; reduce
C. reduces; reduce
D. reduces; increase AND increases; reduce
Answer:
C. reduces; reduce
Explanation:
When there are an inflow and outflow of capital with respect to the foreign as an in and out of an economy so this represents a major and important aspect of the globalization. Simultaneously these type of inflows and outflows important impact the depreciation and the appreciation of the currency of the country in terms of foreign exchange reserves that directly impacted
Therefore the correct option is c.
On March 1st, the Picasso Co. issued a 12 month, $120,000 note, to the Bank of Carbondale. The note carries a 10% interest rate and all payments for principal and interest will be paid at the end of 1 year. What is the maturity value of the note?
Answer:
The maturity value of the note is $132,000
Explanation:
A Loan note is a promissory note that is signed to make a promise of an amount of Loan taken by someone that to be returned after a specific time with interest value at a defined in the loan note.
The maturity value of the loan note can be calculated as follow
Face value = $120,000
Interest rate = 10%
Time period = 1 years
Use following formula to calculate the maturity value of the loan note.
Maturity value = Face value x ( 1 + interest rate )^ numbers of years
Placing values in the formula
Maturity value = $120,000 x ( 1 + 10% )^1
Maturity value = $132,000
Financial markets:____________.
a. reduce diversification.
b. increase transaction costs.
c. determine tax rates.
d. provide liquidity.
Answer:
b. increase transaction costs & d. provide liquidity.
Explanation:
Financial markets reduce diversification and provides liquidity. The market provides means for reduce diversification (reducing risk for borrowers & lenders) and also enhancing liquidity for borrowers & lenders as well.
How long do financial records remain on your credit report?
Answer: Approximately seven years
HOPE U HAD A GREAT THANKSGIVING <3
Jill Angel holds a $200,000 portfolio consisting of the following stocks. The portfolio's beta is 0.875.
Stock Investment Beta
A $50,000 0.5
B 50,000 0.8
C 50,000 1
D 50,000 1.2
Total $200,000
If Jill replaces Stock A with another stock, E, which has a beta of 1.50, what will the portfolio's new beta be?
a. 1.40
b. 1.29
c. 0.86
d. 0.75
e. 1.08
The options provided are incorrect. The correct answer is given below
Answer:
New Portfolio beta = 1.125
Explanation:
The portfolio beta is the function of the weighted average of the individual stock betas that form up the portfolio. The formula to calculate the beta of a portfolio is as follows,
Portfolio beta = wA * Beta of A + wB * Beta of B + .... + wN * Beta of N
Where,
w represents the weight of each stock in the portfolioNew Portfolio beta = 50000/200000 * 0.8 + 50000/200000 * 1 +
50000/200000 * 1.2 + 50000/200000 * 1.5
New Portfolio beta = 1.125
benefits are an important aspect of employee compensation and they involve the direct financial payments employees receive for remaining with an employer.
true or false
A) A country's natural unemployment rate is 4 percent and its actual unemployment rate is 7 percent, what is its cyclical unemployment rate? Instructions: Enter the value for the output gap as an absolute number B) According to Okun's law, this country would have a recessionary output gap of percent percent.
Answer:
a. Cyclical unemployment rate = 3%
b. According to Okun's law, this country would have recessionary output gap of 6%
Explanation:
Note: The full and organized question is attached as picture below
a. A country's natural unemployment rate = 4% & its actual unemployment rate = 7%
Cyclical unemployment rate = Actual unemployment rate - Natural unemployment rate
Cyclical unemployment rate = 7 - 4
Cyclical unemployment rate = 3%
Cyclical unemployment is known to happen when the overall demand for goods and services in an economy cannot reach the level of full employment
b. Okun's law is known as the relationship between the economy unemployment rate and its Gross National Product
According to Okun's law, this country would have recessionary output gap of 6%. This comes from if a country's recessionary output gap grows by 4%, then its cyclical unemployment rate will increase by 2%
a. The cyclical unemployment rate is 3%
Cyclical unemployment can be described as the type of unemployment that exists because full demand for goods and services cannot attain full employment.
The natural rate of unemployment = 4%
The actual rate of unemployment = 7%
cyclical unemployment =
Actual - natural
7% - 4% = 3%
Therefore the cyclical unemployment rate is 3%.
b. According to Okun's law the recessionary gap would be 6%.
The reason for this is that the law states that when there is natural unemployment, the recessionary gap can be gotten by adding 2% to the natural rate.
4%+2% = 6%
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As a result of the ad campaigns depicting Brazil as a multicultural land of carnivals and beaches, any mention of the country makes people think of sun and sand. This is an example of ________.
A) collectivism
B) target market impact
C) ethnocentric thinking
D) country-of-origin effect
E) cognitive dissonance
How will the depreciation of the Japanese Yen vis-Ã -vis the USD impact FDI from U.S. into Japan?
Answer:
Generally, when a currency depreciates, that results in higher foreign direct investment. I.e. if the currency of any country depreciates, investing in that country becomes cheaper for foreign companies, e.g. land, equipment or existing facilities are worth less if the investors brings an appreciated foreign currency.
In this specific case, if the yen depreciates, US foreign direct investment in Japan should increase.
Solomon Services Company has 69 employees, 29 of whom are assigned to Division A and 40 to Division B. Solomon incurred $413,310 of fringe benefits cost during 2018. Required: Determine the amount of the fringe benefits cost to be allocated to Division A and to Division B.
Answer:
Division A - $173,710Division B - $239,600Explanation:
First determine the fringe benefits per employee for the whole company;
= 413,310 / 69
= $5,990 per employee
Division A has 29 employees so the fringe benefit cost is;
= 29 * 5,990
= $173,710
Division B has 40 employees so the fringe benefit cost is;
= 40 * 5,990
= $239,600
E-Tech Initiatives Limited plans to issue $500,000, 10-year, 4 percent bonds. Interest is payable annually on December 31. All of the bonds will be issued on January 1, 2019. Show how the bonds would be reported on the January 2, 2019, balance sheet if they are issued at 102.
Answer:
E-Tech Initiatives Limited
Partial balance sheet
as on January 2, 2019
Liabilities
Long term Liabilities
Bond Payable ________________ $500,000
Add: Premium on Bond _________ $10,000
_____________________________________ $510,000
Explanation:
First Calculate the issuance value
Issuance value = $500,000 x 102% = $510,000
The bond is issued on Premium, Now calculate the premium on bond value
Premium on bond = Issuance value - Premium on Bond
Premium on bond = $510,000 - $500,000
Premium on bond = $10,000
The bond payable value of $500,000 and Premium on the bond aer reported in the long term liability section of balance sheet.
The preparation of the bond that should be reported on the balance sheet is presented below:
E-Tech Initiatives Limited
Partial balance sheet
As on January 2, 2019
Liabilities
Long term Liabilities
Bond Payable $500,000
Add: Premium on Bond $10,000 ($510,000 - $500,000)
Carrying value $510,000 ($500,000 * 102%)
In this way, it should be presented.
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The composition of the Fingroup Fund portfolio is as follows:
Stock Shares Price
A 200,000 $ 34
B 268,000 56
C 416,000 36
D 520,000 45
The fund has not borrowed any funds, but its accrued management fee with the portfolio manager currently totals $56,000. There are 4.5 million shares outstanding.
What is the net asset value of the fund? (Round your answer to 2 decimal places.)
Answer:
$13.36
Explanation:
The computation of the net asset value of the fund is as follows:
Total value
= 200,000 shares × $34 + 268,000 shares × $56 + 416,000 shares × $36 + 520,000 shares × $45
= $6,800,000 + $15,008,000 + $14,976,000 + $23,400,000
= $60,184,000
Now the net asset value is
= ($60,184,000 - $56,000) ÷ (4,500,000)
= $13.36
In many countries, one of the roles of the central bank is to provide loans to distressed financial institutions. In economics, the term for this is:
A. bailout bank
B. ender of last resort
C. source of ultimate credit
D. rovider of fiduciary nsurance
E. liquidity resource
Answer: Bailout Banking
Explanation:
Which item is not correct with respect to the treatment of sustainable and transitory items and a company's income statement?
a. Financial reporting assists statement users in forecasting future cash flows by providing an income statement format that segregates components of net income.
b. Income statements prepared in accordance with GAAP differentiate between income components that are believed to be sustainable and those that are transitory.
c. The income statement isolates a key figure called "income from sustainable operations."
d. Transitory items are disclosed separately on the income statement so that statement users can place less weight on these earnings components when forecasting future profitability.
Answer:
c. The income statement isolates a key figure called "income from sustainable operations."
Explanation:
Remember, an income statement is a financial report document that contains the revenues and expenses of a company in other to determine if the company is making a profit or loss in a particular period.
However, with respect to the treatment of sustainable and transitory items and a company's income statement, it is incorrect to say that the "income statement has an isolated key figure called "income from sustainable operations," because it often notes transitory items and sustainable income components but not isolating them.
Marginal cost is defined as:________.
a. total variable cost divided by total output.
b. the change in total costs from producing one more unit of output.
c. total cost divided by total output.
d. the change in fixed cost from producing one more unit of output.
Answer:
b. the change in total costs from producing one more unit of output.
Explanation:
The marginal cost is the cost that incurred for generating one more additional unit of output
It could be computed as shown below:
Marginal cost = Change in total cost ÷ change in quantity
Therefore as per the above explanation, the option b is correct
And, the same is to be considered
Thus, all the other options are incorrect
Why is it important to understand that the amount cash paid for taxes is different than the amount of income tax expense?
Answer: To know the amount of tax the business should pay from reported profit which is different from it's actual tax bill
Explanation:
Income tax expense could be described as what is calculated that the company owes in taxes according to accounting rules. They are reported on the income statement.
While Income tax payable is described as the actual amount the company owes in taxes based on the rules of tax code. They appear on the balance sheet of the company accounting documents until the bills are cleared off or paid.
The reason for understanding the difference is to know the amount of tax the business should pay from reported profit which is different from it's actual tax bill
You are evaluating shares in Honeywell International (HON). They currently pay an annual dividend of $4.00 per share this year and expect to raise that by 5% per year every year in the future. If you use a discount rate of 10%, what is the value of HON shares(to two decimal places)?
Answer:
$84
Explanation:
Calculation for what is the value of HON shares
Using this formula
Value of HON shares=(Expected dividend next year)/(Discount rate -Growth rate of dividend)
Let plug in the formula
Value of HON shares= 4(1+.05)/(.10-.05)
Value of HON shares= (4.2/ .05)
Value of HON shares= $84
Therefore the Value of HON shares will be $84
The gross profit method is most commonly used to:_______ a. estimate the cost of inventory from incomplete records. b. determine the exact cost of inventory. c. develop a sales budget. d. replace the year-end physical inventory.
Answer:
a. estimate the cost of inventory from incomplete records.
Explanation:
The gross profit method is used to estimate the cost of inventory from incomplete records. This is done by determining the amount of gross profit using the Sales Revenue and the Gross Profit Margin. Then finding the difference between the Cost of Goods available for sale and this Gross Profit to reach to the estimated cost of inventory.
Assume that labor is plotted on the horizontal axis and capital is plotted on the vertical axis. A firm plans to spend $1,000 per week on inputs and confronts a wage rate of $10 per hour and a capital rental rate of $20 per hour. Given this information, what will be the slope of the isocost curve?
A. -2
b. -1/2
c. -100
d. -50
Answer:
b.-1/2
Explanation:
Calculation for what will be the slope of the isocost curve
Using this formula
Slope of isocost line = -Wage rate/Capital rental rate
Let plug in the formula
Slope of isocost line=-10/20
Slope of isocost line=-1/2
Therefore the Slope of isocost line will be -1/2
What is the term used to describe the linking of key product or service requirements to process capabilities?
Answer:
Product or service profiling.
Explanation:
Product or service profiling is the term used to describe the linking of key product or service requirements to process capabilities.
Generally, most organizations and business owners use the product or service profiling strategy to enhance consistency through the identification of their key services or product line and as such are avail the opportunity to select the appropriate process, procedures and techniques to achieve their goals and objectives successfully.
If an investor purchases a bond when its current yield is higher than the coupon rate, then the bond's price will be expected to::_______
a. increase over time, reaching par value at maturity
b. exceed the face value at maturity
c. be less than the face value at maturity
d. decline over time, reaching par value at maturity
Answer:
a. increase over time, reaching par value at maturity
Explanation:
If current yield is more than coupon rate, it means that the bond price is less than par value, as time to maturity decreases bond value amortizes to par value. Thus, If an investor purchases a bond when its current yield is higher than the coupon rate, then the bond's price will be expected to increase over time, reaching par value at maturity.
A fixed asset with a cost of $31,588 and accumulated depreciation of $28,429.20 is sold for $5369.96. What is the amount of gain or loss on disposal of the fixed asset
Answer:
$2,238.16
Explanation:
In the disposal of assets, gain or loss will be a comparison between the book value and the selling price.
Book value is the asset costs minus accumulated depreciation.
in this case, the book value will be
= Asset cost - Depreciation
= $31,588- $28,429.20
=$3,158.8 is the book value.
Gain or loss = selling price- book value
=$5,369.96 - $3,158.8
=$2,238.16
A gain of$2,238.16 will be gain from that sale.
In the long-run the inputs of all the factors of production can be varied by the firm, consequently, firms can combine the factors of production more ______________ and, therefore, costs in the long-run are lower than in the short-run.
Answer:
Efficiently
Explanation:
In production, long run is simply the period of time that is long enough for all inputs to be changed. While short run is the time frame, usually so brief, a firm cannot change the amount of every input. Usually, in In the short run, some inputs are fixed, while in the long run, all inputs are variable and Profit maximization can only occur with minimization of costs of inputs.
Firms can combine the factors of production more in the long-run the inputs of all the factors of production and also In a long run, it can alter ot change variousproduction levels due to various economic profits or losses in view.