galvatron metals has a bond outstanding with a coupon rate of 6.5 percent and semiannual payments. the bond currently sells for $1,905 and matures in 15 years. the par value is $2,000 and the company's tax rate is 21 percent. what is the company's aftertax cost of debt?
Answers
Galvatron metals has a bond outstanding with a coupon rate of 6.5 percent and semiannual payments. the bond currently sells for $1,905 and matures in 15 years. The company's after-tax cost of debt is 5.22%.
What is the company's aftertax cost of debt?Generally, To calculate the after-tax cost of debt, you need to first calculate the before-tax cost of debt. To do this, you need to determine the bond's yield to maturity. The yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures.
To calculate the YTM, you can use the following formula:
YTM = (C + (F - P) / N) / ((F + P) / 2)
Where:
C is the annual coupon payment
F is the face value of the bond (also known as the par value)
P is the price of the bond
N is the number of years to maturity
In this case, the annual coupon payment is 6.5% * $2,000 = $130 The face value of the bond is $2,000 The price of the bond is $1,905 The number of years to maturity is 15
Plugging these values into the formula gives us:
YTM = ($130 + ($2,000 - $1,905) / 15) / (($2,000 + $1,905) / 2) = 6.55%
To convert this to an after-tax cost of debt, you need to multiply it by (1 - tax rate). In this case, the company's tax rate is 21%, so the after-tax cost of debt is:
After-tax cost of debt = 6.55% * (1 - 21%) = 5.22%
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Related Questions
billy's exterminators, inc., has sales of $240,000, costs of $100,000, depreciation expense of $20,000, interest expense of $35,000, and a tax rate of 21 percent. what is the net income for this firm?
Answers
The internet profits for this organization is Addition to retained earnings = Net profits - dividends = 218400 - 85000 = 133400.
The required details for internet profits in given paragraph
In business and accounting, internet profits (additionally overall complete profits, internet earnings, internet profit, backside line, income profit, or credit score income) is an entity's profits minus fee of products bought, fees, depreciation and amortization, interest, and taxes for an accounting period. It is computed because the residual of all sales and profits much less all fees and losses for the period, and has additionally been described because the internet growth in shareholders' equity that effects from a company's operations. It is special from gross profits, which most effective deducts the fee of products bought from revenue.
For families and individuals, internet profits refers to the (gross) profits minus taxes and different deductions (e.g. mandatory pension contributions).
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From the end of 2010 to the end of 2011, M1 increased from $2,006 billion to $2,311 billion. By what percentage did M1 increase?
Answers
Answer:
15.20%
Explanation:
The computation of the M1 increase is shown below:
= (M1 End of the year 2011 - M1 end of the year 2010) ÷ M1 End of the year 2010
= ($2,311 billion - $2,006 billion) ÷ ($2,006 billion)
= 15.20%
Which of the following could be considered collateral for a loan? (Select all that apply.)
A. buildings
B. inventory
C. machinery
D. wages
Answers
Option B: inventory
Collateral is simply an asset, such as a car or home, that a borrower offers up as a way to qualify for a particular loan. collateral can make a lender more comfortable extending the loan since it protects their financial stake if the borrower ultimately fails to repay the loan in full.
The biggest risk of a pawn loan is that you can lose your assets if you don't repay the loan. it's especially dangerous if you back your loan with a very valuable asset like your home. It requires you to have valuable assets.
many banks and credit unions offer savings accounts, certificates of deposit (CD) funds, or secured personal loans, which are personal loans secured by your car. for this reason, these loans are sometimes referred to as mortgages. often there is no limit to these types of credits.
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why do so many people tell me not to go to law school, that it's a waste of time and money, and that the job market is abysmal for lawyers?
Answers
Many people are warning against going to law school because the traditional legal job market is becoming an increasingly competitive and difficult field to break into.
Competition is increasing steadily as more people with college degrees are opting to go to law school for career opportunities and traditional legal jobs are being replaced with alternate and more affordable options. Additionally, the long-term costs associated with law school, including tuition, living expenses, books, and studying time, can add up to an immense financial burden.
On top of this, the job market for recent law graduates is much weaker than it was even a few years ago, meaning many recent graduates end up in jobs that are unrelated to their law degree.
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what is bankaccount
Answers
Answer:
Kung san mo Tatago pera mo
Explanation:
commonsense
Stocks are generally considered a higher risk because:
a) Their value varies over time
b) They are not covered by FDIC
c) Rate of returns are not guaranteed
d) All the above
Answers
if a food server worker follows directions, how long does it take to wash his/her hands
Answers
Answer:
A food server worker should wash his/her hands for 20 sec or longer.
Hopefully this helped :)
distinguish between products tax and production tax
Answers
Answer:
Some examples of production taxes are land revenues, stamps and registration fees and tax on profession. Product taxes are paid on the actual volume of production. It is paid per unit of product. For example, excise duty, service tax, sales tax etc.
What are the two advantages of selling digital products
Answers
Digital goods are intangible assets or media that may be sold online without the requirement for physical inventories to be sourced or managed.
These goods are frequently made available for download or streaming in the form of PDFs, MP3s, movies, software, or templates.
Advantages of Selling Digital Goods
Save time: You don't need to source or oversee inventory when you offer digital goods.Spend less: Physical goods sourcing, storage, and shipping are expensive, as is keeping track of inventory.Digital products can be scaled indefinitely.Large margins of profit: The profit margins on digital goods are quite high because there is no need to acquire and maintain physical inventories. Automation Possibilities: Delivery of digital products can be automated rather easily, freeing up your time to concentrate on expanding your company.To learn more about Digital goods visit;
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Product enhancements
A) do not really change the basic product.
B) include guarantees and warranties.
C) include features and options
D) reduce the number of target markets one product can satisfy.
Answers
Answer:
C or A
Explanation:
I could answer better with more context
what are some common tasks performed by Psychiatrists? (Select four options)
A administering first aid and life support care
B collaborating with other medical professionals
C maintaining patient information and records
D developing diagnostic imaging techniques
E prescribing, directing, or administering psychotherapeutic treatments or medications
F analyzing and evaluating patient data or test findings
Answers
Answer:
B, E and F and explanation I share you other thought about it
Explanation:
Psychiatrists are medical doctors who specialize in the treatment of mental health conditions. Some common tasks performed by psychiatrists include:
Conducting initial evaluations and assessments to diagnose mental health conditionsPrescribing and managing medications to treat mental health conditionsProviding individual, family, or group therapy to help patients manage their mental healthDeveloping and implementing treatment plans for patientsCollaborating with other healthcare providers to coordinate care for patientsProviding crisis intervention and support to patients experiencing mental health emergenciesConducting research to advance the field of psychiatry and improve treatment options for patients.Ethics is Question 2 options: not synonymous with law. impossible to codify into law. universal and cannot differ between cultures. the minimum acceptable standard in business practice.
Answers
Ethics is not synonymous with law. The minimum acceptable standard in business practice.
While laws set legal standards for behavior, ethics are a set of moral principles that guide behavior and decision-making in a society or organization. Ethical behavior goes beyond what is legally required and involves considerations such as fairness, honesty, and responsibility. While laws can serve as a guide for ethical behavior, not all ethical behavior is required by law, and not all behaviors required by law are considered ethical. Additionally, ethics can differ between cultures and may not be universal. Therefore, it is important for individuals and organizations to develop a strong ethical framework that guides their behavior and decision-making.
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DERIV.COM
In as much detail as you can, explain how you believe Deriv.com's business works.
What questions do you have about the company or the job you are applying for as client suuport executive?
Answers
Deriv.com operates as an online trading platform that offers a wide range of financial products to its clients. The company provides a user-friendly interface where individuals can trade various assets, including currencies, commodities, and indices. Deriv.com acts as an intermediary between traders and the financial markets, facilitating transactions and providing necessary tools and resources for trading. As a client support executive, your role would involve assisting customers with their inquiries, providing guidance on using the platform, resolving technical issues, and ensuring a positive trading experience for clients.
Deriv.com's business model revolves around providing an accessible and reliable online trading platform for individuals interested in financial markets. The company offers a diverse range of financial products, allowing traders to speculate on price movements and profit from market fluctuations. Through their platform, clients can trade currency pairs, commodities like gold and oil, and global indices.
As a client support executive, your primary responsibility would be to assist clients with their inquiries and concerns. This includes providing guidance on using the platform's features, explaining trading concepts, assisting with deposit and withdrawal processes, and addressing technical issues that clients may encounter. You would play a crucial role in ensuring that clients have a smooth and satisfactory trading experience.
Regarding questions you may have about the company or the job, it would be beneficial to inquire about the specific responsibilities and expectations of the client support executive role. You may also want to learn more about the company's customer support processes, the training and resources provided to employees, and any opportunities for professional growth within the organization. Additionally, understanding the company's values, mission, and vision can provide insights into its culture and long-term goals.
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Last year a company spent $11 million on Internet advertising. If that amount increases by 17 percent this year, how much will the company spend on Internet advertising?
Answers
If a company spent that much on internet advertising and increased it by 17%, the new amount spent would be $12.87 million.
How much did the company spend on advertising?The amount spent can be calculated as:
= Amount x ( 1 + increase in advertising)
Solving gives:
= 11 million x ( 1 + 17%)
= 11 x 1.17
= $12.87 million
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Why is price important to a company?
A.
It covers their costs.
B.
It is a part of the marketing mix.
C.
It makes customers purchase their products.
D.
It brings the company profits and decides its ability to survive in the market.
Answers
Answer:
B. It is a part of the marketing mix.
Explanation:
Price refers to the amount of money a customer or consumer buying goods and services are willing to pay for the goods and services being offered. The price of goods and services are primarily being set by the seller or service provider.
Price is important to a company because it is a part of the marketing mix.
Generally, a marketing mix is made up of the four (4) Ps;
1. Products: this is typically the goods and services that gives satisfaction to the customer's needs and wants. They are either tangible or intangible items.
2. Price: this represents the amount of money a customer buying goods and services are willing to pay for it.
3. Place: this represents the areas of distribution of these goods and services for easier access by the potential customers.
4. Promotions: for a good sales record or in order to increase the number of people buying a product and taking services, it is very important to have a good marketing communication such as advertising, sales promotion, direct marketing etc.
Price is generally considered to be a variable in the marketing mix that is most flexible because unlike other elements of production, it can be easily changed. An organization can decide to either raise or lower it's price depending on the nature of the market.
How important is money
Answers
Answer:
very important
Explanation:
money is a global income source for everyone. we all have different types but it is all still money. now say one country got rid of money and had people pay for stuff using other things. if china did that lots of different countries wouldn't be able to get stuff from there unless they had so much of that product they could just give it up.
On January 1, 2019, Billips Corporation purchased equipment having a fair value of $72,054.94 by issuing a $90,000 note, payable in three $30,000 annual installments beginning December 31, 2019.
Required:
Prepare:
a. the journal entry to record the purchase of the equipment.
b. a schedule to compute the annual interest expense.
c. the journal entries to record yearly interest expense and note repayments over the life of the note.
Answers
Answer:
a. the journal entry to record the purchase of the equipment.
January 1, 2019, equipment is purchased
Dr Equipment 72,054.94
Dr Discount on notes payable 17,945.06
Cr Notes payable 90,000
b. a schedule to compute the annual interest expense.
Since we are not given any type of interest rate to compute the amortization of the discount of notes payable using the effective interest method, I will use straight line amortization. Amortization of interest expense per year = $17,945.06 / 3 = $5,981.68
interest expense for year 1 = $5,981.68, carrying value of discount on notes payable = $11,963.38interest expense for year 2 = $5,981.68, carrying value of discount on notes payable = $5,981.70interest expense for year 3 = $5,981.70.c. the journal entries to record yearly interest expense and note repayments over the life of the note.
December 31, 2019, accrued interest expense
Dr Interest expense 5,981.68
Cr Discount on notes payable 5,981.68
December 31, 2020, accrued interest expense
Dr Interest expense 5,981.68
Cr Discount on notes payable 5,981.68
December 31, 2021, notes payable is paid off
Dr Notes payable 90,000
Dr Interest expense 5,981.70
Cr Cash 90,000
Cr Discount on notes payable 5,981.68
On average, out of every dollar spent on employee compensation, how much of it goes to benefits?
Answers
The to remember that this figure can vary widely depending on a variety factors.
Why will be out of every dollar spent goes to benefits?The amount of money spent on employee benefits as a percentage of total employee compensation can vary depending on factors such as industry, company size, and location. However, on average, it's estimated that about 30% of every dollar spent on employee compensation goes towards benefits.
This estimate is based on data from the Bureau of Labor Statistics (BLS), which tracks and reports on various labor-related statistics in the United States. According to the BLS, benefits account for an average of 30.3% of total compensation costs for civilian workers in private industry as of March 2021.
It's worth noting that this figure can vary significantly depending on the specific benefits offered by a company. For example, a company that offers more generous health insurance plans or retirement benefits may spend a higher percentage of its compensation budget on benefits than a company that offers more modest benefits.
In addition, the COVID-19 pandemic has also affected the landscape of employee benefits. Many companies have had to adjust their benefits packages to include additional sick leave, flexible work arrangements, and other accommodations due to the pandemic.
Overall, while 30% is a useful estimate for the average amount spent on employee benefits as a percentage of total compensation, it's important to remember that this figure can vary widely depending on a variety of factors.
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discuss the economic importance of the tertiary sector
Answers
Answer: sector provides basic services such as hospitals, educational institutions, post and telegraph services, police stations, courts, municipal corporations, defence, banks, insurance etc. ... Thus, tertiary sector is certainly important for the development of other sectors in an economy.
Explanation:
Answer:
studying
Explanation:
good to study economics to know the national income and taxrs
Earning a degree can be expensive but which example shows why it might be worth it?
(financing higher education)
Answers
Answer:
Earning a degree can be expensive but it can almost guarantee you great job opportunities and great job opportunities can provide great income, and other benefits.
Explanation:
Assuming technology and production techniques are fixed and cannot change, if beyond some point of production a firm experiences declining units of additional output with each additional unit of labor input, then the firm is experiencing the effects of the law of ______.
Answers
Based on the given scenario, it can be inferred that the firm is experiencing the effects of the law of diminishing returns
What is diminishing returns?This refers to the economic law that states that if production techniques are fixed and a firm is not able to increase output and faces declining units, then it is in the decline of resources/production.
Hence, we can see that based on the given scenario, we can see that this is the perfect description of diminishing returns because additional units cannot be produced.
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identify and briefly describe (one paragraph) an organization which you writing an ISSP for; clearly identify the nature/subject of your ISSP; and outline the key sections and content of your ISSP and highlight at least one feature of the ISSP
Answers
The organization for which the ISSP is being developed is a technology consulting firm specializing in cybersecurity services.
The ISSP is an Information Systems Security Plan that aims to establish a robust framework for ensuring the confidentiality, integrity, and availability of client data and information systems within the organization. It includes key sections such as risk assessment, access control policies, network security measures, employee training and awareness programs, and ongoing monitoring. One notable feature is the comprehensive employee training and awareness program, which educates employees on information security best practices and fosters a security-conscious culture within the organization
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Help plz , needs to be turned in
Answers
Answer:that should be based on your class and teacher try checking your syllabus
Explanation:
richard is reading over his title policy. it states that it will not cover any overlapping of improvements. is this standard in texas?
Answers
Title policy coverage in Texas and coverage for overlapping improvements
The standard title policy in Texas won't cover any overlapping of improvements. Therefore, Richard's policy is not any different from the standard one. So, it is standard in Texas.
A title policy is a form of insurance coverage that offers protection to property owners, buyers, and mortgage lenders from unforeseen title defects. In Texas, title policies are provided by title insurance companies regulated by the Texas Department of Insurance.
Types of Title Policy in Texas
The standard Texas title policy coverage includes two types of title policies:
Owner's Title Policy: The owner's title policy offers protection to the homeowner against title problems. The coverage provided is for the amount of the home's purchase price. This policy lasts as long as the owner or his heirs hold the title to the property.Lender's Title Policy: A lender's title policy offers coverage to the lender to secure their investment in the property. This policy's coverage is the amount of the mortgage loan, and it lasts until the mortgage loan is paid off.Title policy coverage exclusions
The Texas Department of Insurance provides a standard title policy that includes different coverage exclusions. Among the many exclusions, here are the coverage exclusions related to improvements:
Unrecorded liens and rights of parties in possessionOverlapping improvements and conflicts in boundary linesImprovements made after the effective date of the title policyUnauthorized alterations and encroachmentsEncroachments that affect the property's use or enjoyment by the owner, including those caused by neighbors or governmental entitiesBottom Line- The standard title policy in Texas won't cover any overlapping of improvements. Therefore, Richard's policy is not any different from the standard one.To know more about the "standard title policy": https://brainly.com/question/14662950
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.3. One day you happen to hear a snippet of conversation between two graduate students, who are drinking coffee and contemplating an open box of exquisitely delicious chocolate truffles in the Page Break Café. The first student opines that one can definitely outline a set of objective design principles that should underpin the construction of any professional chart or map. The second student disagrees vehemently and argues that the one and only important thing to worry about is aesthetics. The first student is speechless. What do you think? Use your knowledge of data visualization to inform your answer, and be sure to explain your answer carefully.
Answers
The debate between the two graduate students revolves around the importance of objective design principles versus aesthetics in the construction of professional charts or maps.
Objective design principles in data visualization serve as guidelines to ensure clarity, accuracy, and effective communication of information. These principles include considerations such as appropriate use of colors, legibility of text, proper labeling, and accurate representation of data. By adhering to these principles, charts and maps can convey the intended message clearly, facilitating data comprehension and analysis.
However, aesthetics cannot be disregarded. Visual appeal and aesthetics contribute to the overall user experience and can enhance engagement with the data. An aesthetically pleasing chart or map can captivate the viewer's attention, stimulate interest, and encourage exploration of the data. Attention to aesthetics involves aspects such as visual balance, appropriate use of visuals and typography, and overall design coherence.
Both objective design principles and aesthetics are important in data visualization because they serve different purposes. Objective design principles ensure accuracy and effective communication, while aesthetics enhance engagement and user experience. Striking a balance between these two aspects is crucial to create visually appealing and informative visualizations that effectively convey the intended message while engaging the audience.
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4) Pretend you have just been hired by the CEO of P&G as the strategic manager. You learnt that in the past, the company shut down some 30 manufacturing plants around the globe and laid off 13,000 employees. This may have had a negative impact on the organization. As a result, your CEO is keen on creating a learning organization to build and motivate staff morale. Briefly describe to the CEO two key elements for creating a learning organization in P&G.
Answers
As a strategic manager, creating a learning organization is paramount in increasing staff morale and increasing productivity. Learning organizations are adaptive organizations that operate in an ever-changing business environment. In creating a learning organization in P&G, the following two key elements are essential:
1. Encouraging employee learning and development The first step is to encourage employee learning and development. One way to achieve this is by providing training opportunities, mentorship programs, and coaching sessions to employees. Encouraging learning and development among employees will help build their capacity and enable them to handle new tasks and challenges that arise. When employees are confident in their ability to handle challenging tasks, they become more committed to their work, which improves their morale and productivity.
2. Promoting a culture of innovation The second key element for creating a learning organization is promoting a culture of innovation. Innovation is a vital element of any organization that seeks to stay ahead of its competitors. It is essential to create an environment where employees are encouraged to come up with new ideas, experiment, and take calculated risks. Encouraging innovation among employees will not only result in better products and services, but it will also lead to increased employee engagement and job satisfaction. In conclusion, creating a learning organization is a crucial step in building and motivating staff morale. By encouraging employee learning and development and promoting a culture of innovation, P&G will become an adaptive organization that is well-positioned to compete in an ever-changing business environment.
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Calculate the elasticity of a coat if the price were to increase from $50 to $75 and the quantity demand was to fall from 30 to 20. Would they be elastic or inelastic?
Answers
The elasticity of a coat if the price were to increase from $50 to $75 and the quantity demand was to fall from 30 to 20 is elastic.
To calculate the elasticity of demand for a jacket, we can use the formula:
Elasticity of Demand = (Percent change in quantity demanded) / (Percent change in price)
First, we need to calculate the percentage change in quantity demanded:
Percent change in quantity demanded = ((New quantity - Old quantity) / Old quantity) x 100D
44 Percent change in quantity demanded =
((20 - 30) / 30) x 100% = -33.33D
Next, we need to calculate the percentage change in price:
Price change percentage = ((New price - Old price) / Old price) x 100VND
44 Percent Change in Price = (($75 - $50) / $50) x 100% = 50D
44 We can now insert these values into the elasticity of demand formula:
Elasticity of Demand = (-33.33%/50%) = -0.6667
The elasticity of demand for coats is negative, which means that coats are a normal good. The absolute value of the elasticity of demand is greater than 1, which indicates that the demand for coats is elastic.
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any two importance of office resources
Answers
Two importance of office resources are greater output and promote productivity .
What are office resources ?All of the resources and amenities found in an office, including people, tools and supplies, furniture and equipment, cash, modes of transportation, and communication, are referred to as office resources. These resources are used to help the organization achieve its goals.
Two improtance of office resources are:Greater output is made possible because every business strives to produce as much as possible while using the fewest resources possible. Better resource utilization management can be used to accomplish such a feat.It helps to promote productivity: Office supplies aid in boosting office employees' productivity. Equipment such as furniture, machinery, and other items make work more comfortable and convenient, which improves worker productivity.Learn more about office resources here https://brainly.com/question/20436648
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BSW Bank currently has $1,000 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 6 percent of transaction deposits.
a. If the Federal Reserve decreases the reserve requirement to 5 percent, show the balance sheet of BSW and the Federal Reserve System just before and after the full effect of the reserve requirement change. Assume BSW withdraws all excess reserves and gives out loans, and that borrowers eventually return all of these funds to BSW in the form of transaction deposits. (Do not round intermediate calculations. Enter your answers in millions rounded to the nearest dollar amount.)
Panel A: Initial balance sheets
Federal Reserve Bank
Assets Liabilities
(Click to select)LoansTransaction depositsReserve accountsReserve deposits at FedSecurities $ million (Click to select)Reserve deposits at FedLoansReserve accountsTransaction depositsSecurities $ million
BSW Bank
Assets Liabilities
(Click to select)LoansReserve deposits at FedSecuritiesReserve accountsTransaction deposits $ million (Click to select)LoansTransaction depositsReserve deposits at FedReserve accountsSecurities $ million
(Click to select)Transaction depositsReserve accountsSecuritiesLoansReserve deposits at Fed million Panel B: Balance sheet after all changes
Federal Reserve Bank
Assets Liabilities
(Click to select)SecuritiesLoansReserve deposits at FedReserve accountsTransaction deposits $ million (Click to select)LoansReserve accountsTransaction depositsSecuritiesReserve deposits at Fed $ million
BSW Bank
Assets Liabilities
(Click to select)SecuritiesLoansReserve deposits at FedTransaction depositsReserve accounts $ million (Click to select)Reserve deposits at FedTransaction depositsSecuritiesLoansReserve accounts $ million
(Click to select)SecuritiesReserve accountsTransaction depositsLoansReserve deposits at Fed million b. Redo part (a) using a 8 percent reserve requirement. (Do not round intermediate calculations. Enter your answers in millions rounded to the nearest dollar amount.)
Panel A: Initial balance sheets
Federal Reserve Bank
Assets Liabilities
(Click to select)Reserve deposits at FedSecuritiesLoansReserve accountsTransaction deposits $ million (Click to select)SecuritiesTransaction depositsReserve accountsLoansReserve deposits at Fed $ million
BSW Bank
Assets Liabilities
(Click to select)Reserve accountsTransaction depositsLoansReserve deposits at FedSecurities $ million (Click to select)SecuritiesLoansReserve deposits at FedTransaction depositsReserve accounts $ million
(Click to select)Transaction depositsReserve deposits at FedSecuritiesReserve accountsLoans million Panel B: Balance sheet after all changes
Federal Reserve Bank
Assets Liabilities
(Click to select)Reserve accountsReserve deposits at FedTransaction depositsLoansSecurities $ million (Click to select)Reserve deposits at FedTransaction depositsReserve accountsLoansSecurities $ million
BSW Bank
Assets Liabilities
(Click to select)Reserve accountsTransaction depositsSecuritiesLoansReserve deposits at Fed $ million (Click to select)LoansSecuritiesReserve deposits at FedReserve accountsTransaction deposits $ million
(Click to select)Reserve accountsReserve deposits at FedSecuritiesTransaction depositsLoans million
Answers
a. Panel A: Initial balance sheets Federal Reserve Bank Assets Liabilities Securities Reserve deposits at Fed Loans Reserve accounts Transaction deposits $1,000 million
BSW Bank
Assets Liabilities
Loans
Reserve deposits at Fed
Securities
Reserve accounts
Transaction deposits $1,000 million
Panel B: Balance sheet after all changes
Federal Reserve Bank
Assets Liabilities
Securities Reserve deposits at Fed
Loans
Reserve accounts
Transaction deposits $950 million
BSW Bank
Assets Liabilities
Loans Transaction deposits
Reserve deposits at Fed
Securities
Reserve accounts $950 million
b. Panel A: Initial balance sheets
Federal Reserve Bank
Assets Liabilities
Reserve deposits at Fed
Securities
Loans
Reserve accounts
Transaction deposits $1,000 million
BSW Bank
Assets Liabilities
Reserve accounts
Transaction deposits
Loans
Reserve deposits at Fed
Securities $1,000 million
Panel B: Balance sheet after all changes
Federal Reserve Bank
Assets Liabilities
Reserve accounts
Reserve deposits at Fed
Transaction deposits
Loans
Securities $800 million
BSW Bank
Assets Liabilities
Reserve accounts
Transaction deposits
Securities
Loans
Reserve deposits at Fed $800 million
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a financial exchange will need to occur. Evaluate each of the following types of financial exchanges and recommend the best option for the exchange.
(a) Cash
(b) Credit
(c) Debit
(d) Electronic Funds Transfer (EFT)
Answers
Financial exchange can be of different types however the best option for exchange is A. Cash.
What is Credit?Credit is the type of transfer of financial assets, this transfer includes financial institutions in this type the funds are transferred.
Debit
An exchange type is debit which is the transfer of financial liabilities in return of a consideration, One party transfer a good or service and instead of payment the party which transferred goods also transfers some liabilities.
Electronic Funds Transfer (EFT) is the exchange which is completely online and transfer is made through financial institutions, this transfer is quick.
Cash is the most preferred mode of exchange and therefore this is considered as the best option. Cash is paid in hand, it has the lowest risk of false transfer.
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