The risk-free rate is 6%, and the expected return on the market is 18% and the is the expected return on a stock with a beta of 1.3 is 21.6%.
The risk-free rate is that the rate of come back offered by an investment that carries zero risk. each investment plus carries some level of risk, but tiny, that the safe rate are some things of a theoretical idea. In observe, it's thought-about to be the charge per unit paid on short-run government debt.
If a stock's beta worth is 1.3, it means, on paper this stock is half-hour a lot of volatile than the market. Beta calculation is finished by multivariate analysis that shows security's response therewith of the market.
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fleet, inc. owns 85% of the stock of pete, inc. and 35% of the stock of zete, inc. and 90% of the stock of bete, inc. bete owns 5% of the stock of pete and 5% of the stock of zete. zete owns 10% of the stock of bete. the remaining stock of pete and zete is owned by unrelated individuals. which of the following statements is correct?
Pete Inc: 85% owned by Fleet inc, 5% owned by Bete Inc; Zete Inc: 35% owned by Fleet Inc, 5% owned by Bete Inc; Bete Inc: 90% owned by Fleet Inc, 10% owned by Zete Inc. Therefore, Fleet, Zete, and Bete are an affiliated group (option d)
Affiliated firms are those that are related by ownership, either through one company owning the other as a minority shareholder or by a third party owning numerous companies.
The size of ownership distinguishes an affiliated company from a subsidiary. A subsidiary is a corporation in which another company owns 50% or more of the stock. An affiliated corporation is distinguished by the fact that an individual shareholder owns less than 50% of the company.
We can conclude from the given problem:
Pete Inc: 85% owned by Fleet inc, 5% owned by Bete Inc,
Zete Inc: 35% owned by Fleet Inc, 5% owned by Bete Inc,
Bete Inc: 90% owned by Fleet Inc, 10% owned by Zete Inc,
Hence,
The ones that have share less than 50% is Fleet, Bete, and Zete
Therefore, Fleet, Zete, and Bete are an affiliated group (option d)
Your question is incomplete, but most probably your question was:
Fleet, Inc. owns 85% of the stock of Pete, Inc. and 35% of the stock of Zete, Inc and 90% of the stock of Stock ownership of Bete, Inc. Bete owns 5% of the stock of Pete and 5% of the stock of Zete. Zete owns 10% of the stock of Bete. The remaining stock of Pete and Zeke is owned by unrelated individuals. Which of the following statements is correct?
a. Fleet, Pete, Bete, and Zete are an affiliated group
b. Fleet and Zete are an affiliated group
c. Fleet and Pete are an affiliated group
d. Fleet, Pete, and Zete are an affiliated group
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Would you categorize the marketing area in which frank davis is the marketing director and thomas green is one of the senior market specialists more as a work group or a team?.
The marketing department would fall under the Work Group category, with Thomas Green serving as a Senior Market Specialist and Frank Davis as the Marketing Director.
What does the marketing division include?In addition to supporting the sales department, the marketing department is in charge of developing a marketing strategy, doing market research, assisting with product creation, promoting the company's goods and services, coordinating events, and promoting the company's offerings.
In a company, what exactly is a work group?A group of coworkers who work together to complete certain tasks, projects, or goals is known as a work group. While some work groups only endure a few months, others continue to work together for many years. Employee collaboration and participation in both individual and group work are the goals of these groups.
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question content area left part 1 refer to the diagram to the right. diminishing marginal productivity sets in after part 2 a. the 3rd worker is hired. b. the 2nd worker is hired. c. the 5th worker is hired. d. the 4th worker is hired.
Diminishing marginal productivity sets in after part 2 the 2nd worker is hired.
In economics, productivity refers to how much output can be produced with a given amount of input. Productivity increases when you get more output with the same amount of input, or when you get the same amount of output with less input.
Economic productivity is the value of output obtained per unit of input. For example, if a worker makes two units in one hour and the price is $10 each, his productivity will be $20. Productivity - a measure of efficiency in the use of production factors. It is measured in output per unit of input. Loss – When a company's revenue falls below its costs.
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kragle corporation reported the following financial data for one of its divisions for the year; average assets of $630,000; sales of $1,090,000; and income of $139,520. the investment center profit margin is:
kragle corporation reported the following financial data for one of its divisions for the year; average assets of $630,000; sales of $1,090,000; and income of $139,520. the investment center profit margin is:
Profit margin is equal to income/Sales
=139520/1,090,000
which is equal to
=12.8%
funding is the dedication of money to buy of an asset to acquire an increase in fee over a time frame. funding requires a sacrifice of a few gift asset, consisting of time, money, or attempt. In finance, the motive of making an investment is to generate a return from the invested asset. The return may additionally encompass a benefit (earnings) or a loss realized from the sale of a assets or an investment, unrealized capital appreciation (or depreciation), or funding earnings which includes dividends, hobby, or apartment earnings, or a mixture of capital advantage and earnings.
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You are managing a portfolio of $1.7 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 6 years, and a perpetuity, each currently yielding 10%.
a. How much of each bond will you hold in your portfolio?
b. How will these fractions change next year if target duration is now 9 years?
The strategies for bond portfolio management are aimed at achieving a given objective on the basis of managing fixed income investments. This objective could be to maximize return on investment which is basically achieved by minimizing risk and managing interest rates.
Investors will concentrate on the most liquid investment vehicles for the purposes of this section: stocks, fixed-income securities, cash and equivalents.
What function does an investor serve?The market participant that the general public most frequently associates with the stock market is an investor. Investors are individuals who buy stock in a company with the intention of holding it for a long time because they think it will do well in the future.
Do investors count as owners?You are not a owner; you are a lending investor. You have invested in ownership if you purchase stock in a corporation. Your proportionate part of the company's profits will be deducted from the return you receive.
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the corata appliance manufacturing corporation manufactures two vacuum cleaners, the standard and the super. the following information was gathered about the two products: standard super budgeted sales in units 2,700 900 budgeted selling price $600 $1,700 budgeted contribution margin per unit $700 $1,050 actual sales in units 3,000 1,200 actual selling price $650 $1,680 what is the total salesmix variance in terms of the contribution margin? (round intermediary calculations to two decimal places.)
The total sales mix variance in terms of the contribution margin is 472,500.
Calculation:-
Budgeted sales mix
Standard = 2700/(2700+900) = 0.75
Super = 900/(2700+900) = 0.25
Total sales quantity Variance = (Actual sales-Budgeted) * budgeted sales mix * budgeted contribution margin
Standard = [(3000+1200)-(2700+900)]*0.75*700 = 315,000
Super = [(3000+1200)-(2700+900)]*0.25*1050 = 157,500
Total = 315,000 + 157,500 = 472,500 Favourable.
The following steps show how to calculate the sales structure variance at the individual product level. Subtract the budget quantity from the actual quantity and multiply by the standard contribution margin. The contribution margin is revenue minus all variable costs.
Product sales volume variance is calculated by multiplying the difference between the actual and budgeted sales volume by the average profit, contribution, or revenue per unit. This metric is a measure of sales performance based on the financial impact of exceeding or undershooting budgeted sales.
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at a 3 percent rate of inflation, approximately how many years will it take for prices to double? multiple choice 21 years 30 years 24 years 15 years 9 years
When there is a 3 percent rate of inflation, the approximate number of years it would take for prices to double is C. 24 years.
How to find the doubling time ?When given a rate of increase, you can find the amount of time it would take the measure to double by using something called, " The Rule of 72. " The Rule of 72 is a mathematical rule that posits that you can find the doubling time of a measure if you have the growth rate of that measure, by dividing 72 by that growth rate, with the growth rate being a whole number.
This means that if you have a 3 percent rate of inflation, the number of years it would take for prices to double is :
= 72 / Inflation rate as a whole number
Inflation rate as a whole number is 3 percent.
The number of years for prices to double is therefore:
= 72 / 3
= 24 years
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smathers corporation stock has a beta of .90. the market risk premium is 7.30 percent and the risk-free rate is 2.95 percent annually. what is the company's cost of equity?
9.52% is the company's cost of equity.
What is the cost of equity?The return a company supposedly gives to its professional investors, or shareholders, in order to make up for risks they assume by expanding their business, is referred to as the price of equity. For the a business to function and expand, it needs funding from those other sources.
The information that was given is
the market risk premium is 7.30
the risk-free rate is 2.95
beta of .90
The company's cost of equity is:
= Risk-free rate + Beta(Market risk premium)
= 2.95% + 0.90 (7.30%)
= 2.95/100 + 0.90 (7.30) / 100
= 9.52%
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ignacio, inc., had after-tax operating income last year of $1,198,000. three sources of financing were used by the company: $1 million of mortgage bonds paying 4 percent interest, $4 million of unsecured bonds paying 6 percent interest, and $10 million in common stock, which was considered to be relatively risky (with a risk premium of 8 percent). the rate on long-term treasuries is 3 percent. ignacio, inc., pays a marginal tax rate of 30 percent.
Therefore mortagage bonds after tax cost is 2.8% and unsecured bonds after tax cost is 4.2% and common stock is 12%.
What is after-tax operating income?The term "after-tax operating income" can also be used to define earnings before interest and taxes (EBIAT). It determines a company's profitability without taking into account the capital structure (debt to equity). A preliminary estimate of cash flows after taxes known as ATOI leaves out the tax benefits of debt.. Free cash flow to firm (FCFF), which is equal to net operating profit after tax less changes in working capital, is calculated using ATOI in the form of net operating profit after tax (NOPAT). It is also used to determine economic free cash flow to firm, which is calculated by subtracting capital from after-tax operating income. Since the acquirer's funding will replace the existing financing arrangement, these measures are generally used by analysts searching for acquisition targets.
What is Operating Income?A company's operating and non-operating income and expenses are displayed over time in the profit and loss statement. The primary source of income for a corporation, or its core activity, determines its operating income. For instance, the main things that a manufacturing company produces will be what generates its revenue. The income they receive after deducting direct and indirect costs will be their operational income.
Briefing:Mortgage bonds after-tax cost:
= Interest rate * (1 - tax rate)
= 4% * ( 1 - 30%)
= 4% * 70%
= 2.8%
Unsecured bonds after-tax cost:
= 6% * (1 - 30%)
= 6% * 70%
= 4.2%
Common stock:
= Long term treasury rate + risk premium
= 4% + 8%
= 12%
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Suppose the real risk-free rate is 3.00%, the average expected future inflation rate is 2.25%, and a maturity risk premium of 0.10% per year to maturity applies, i.e., MRP = 0.10%(t), where t is the number of years to maturity. What rate of return would you expect on a 1-year Treasury security, assuming the pure expectations theory is NOT valid? Disregard cross-product terms, i.e., if averaging is required, use the arithmetic average.
a. 5.08%
b. 5.35%
c. 5.62%
d. 5.90%
e. 6.19%
The correct answer (b) 5.35 %
Rate of return on Treasury security
= Risk-free rate+Inflation rate+maturity risk premium
= 3%+2.25%+. 0.1% = 5.35%
What rate of return would you expect on a 1-year Treasury security,
Answer : 5.35 %
What is the average rate of return on Treasury securities?
10 Year Treasury Rate is at 3.60%, compared to 3.51% the previous market day and 1.35% last year. This is lower than the long term average of 4.26%.
What is Rate of return (ROR)?
A rate of return (RoR) is the net gain or loss of an investment over a given time period expressed as a percentage of the initial cost of the investment. 1 When you calculate the rate of return, you are calculating the percentage change from the beginning to the end of the period.
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what are the factors that a business needs to keep in mind when preparing for growth? what are the indicators that a business is growing too fast?
list of factors to consider before starting a business : A Business Idea, Knowledge or Expertise, Market or Demand, Start-up Costs, b and Finance, Competition, Location.
In order to succeed in business today, you must be adaptable and possess strong organizing and planning abilities. Many people start businesses with the expectation that they can turn on their computers or open their doors and start producing money, only to discover that doing so is much harder than they anticipated.
By taking your time and organizing all the necessary procedures for success, you may prevent this in your commercial endeavors. You can succeed in your enterprise.
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diversification works better when select one: a. stock returns are more correlated with each other. b. stock returns are less correlated with each other. c. the difference in expected returns is small. d. the difference in expected returns is high.
Diversification works better when stock returns are less correlated with each other.
By putting money into investments that cover a range of financial products, sectors, and other areas, diversification lowers risk.Systematic or market risk is typically unavoidable but can be reduced through diversification in the case of unsystematic risk.Investors have the option of choosing the assets they want to invest in themselves, or they can choose an index fund that holds a variety of different companies.A diversified portfolio may be difficult and expensive to balance, and because the risk is reduced, the rewards may be lower.A diversified portfolio may provide better opportunities, the pleasure of learning about new assets, and higher risk-adjusted returns.Learn more about Diversification, here
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This is troubleshooting a problem with her computer. She restarted it, checked the power source, and reconnected it to the internet successfully. Since none of these things have helped, what can she do next to try to find the solution to her problem?
A. call a technician
B. search on the internet
C. delete all the files on the computer
D. clear the computer of all programs
Explanation:
ans: A
call a technician
suppose the returns on two stocks are negatively correlated. one has a beta of 1.2 as determined in a regression analysis using data for the last 5 years, while the other has a beta of -0.6. the returns on the stock with the negative beta must have been negatively correlated with returns on most other stocks during that 5-year period.
False. The beta of -0.6 only means that the stock was negatively correlated with the market index used in the regression analysis.
It does not necessarily mean that the stock was negatively correlated with other stocks in the market. It is possible that the returns on the stock with the negative beta were positively correlated with returns on other stocks.
Beta is a measure of the sensitivity of a stock's returns to the market returns. A negative beta implies that the stock tends to move in the opposite direction of the market, but it does not imply that the stock's returns are negatively correlated with other stocks. Correlation indicates the degree to which two stocks move together, not necessarily in the same direction. Therefore, it is possible for two stocks with negative betas to be positively correlated or even uncorrelated.
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the managerial value of regularly consulting the data in the year-to-year performance highlights report has to do with the data provided being the quickest and best way to:
Review the calibre of the operating results, and key performances, and take corrective actions on that basis.
Managers utilize management reporting and reports as an analytical tool to monitor the operation of the company across many divisions and areas.
They are used by senior executives and leadership to inform their strategy choices and track the expansion of the company using real-time metrics.
The reason why it is beneficial for managers to frequently check the data in the report on year-over-year performance highlights is that
: the information in it is the fastest and most efficient approach, to Review the standard of the operating results and key performances, which can help managers in determining, what has to be corrected in the business.
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the interest rate in the economy is 4 percent. what should the fed do to achieve a noninflationary, full-employment level of real gdp?
The basic objective of monetary policy is to assist the economy in achieving a full-employment, non-inflationary level of total output.
What strategies does the Fed use to try to hit its target interest rate?When the Fed wants to change interest rates, it raises or lowers the range determined by IORB and ON RRP rates. As a result, the banks adjust their interest rates accordingly. All other interest rates in the economy are consequently impacted by these rates.
What steps does the Fed take to promote economic expansion?Today, the Fed uses its resources to regulate the money supply in order to support economic stability. The Fed boosts the money supply when the economy is in a slump to encourage growth. On the other hand, when inflation is a risk, the Fed lowers the risk by reducing the supply.
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a retail store wants to secure laptops that are on display. the store manager also wants a record of which employees enter the backroom where inventory is kept. which security option would work best for this situation?
Guards, log sheets, security cameras, only the manager having access to the backroom, cable locks, a token-based lock, a requirement that laptops are seen one at a time, and only the owner having the key to the backroom are all in place. security option would work best for this situation in retail store
Customers and staff need flexibility from retail solutions. The use of cable locks to secure equipment and an electronic lock that keeps track of door activity are only two examples of physical security items that can be used as a solution. In contrast to wholesale, which involves selling to businesses or institutions, retail involves selling goods and services to people. A retailer buys products in bulk from manufacturers, either directly or through a wholesaler, and then sells them to customers in smaller quantities for a profit. The final link in the supply chain between producers and customers is the retailer .The history of retail markets and stores dates back to antiquity. Itinerant peddlers were some of the first merchants.
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esther is very stressed by her caregiving responsibilities and is dealing with it by attempting to hire some home health care. esther is using:
Esther is very stressed by her caregiving responsibilities and is dealing with it by attempting to hire some home health care. esther is using: B. Problem-focused coping
What is Problem-focused coping?Problem-focused coping refers to all active efforts to manage stressful situations and change a troubled person-environment relationship in order to modify or eliminate the sources of stress through individual behavior.
A problem-focused approach to stress management entails actively attempting to solve the problem. Emotion-focused coping, on the other hand, entails attempting to change or reduce the negative emotions associated with stress.
Problem-focused coping is used when the individual can identify the source of the problem or stress. A married couple, for example, can discuss marital problems if they can identify them. When an individual does not understand why they are stressed, emotional coping may be required.
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Complete options
Emotion-focused coping
Problem-focused coping
Self-focused coping
Other-focused coping
focus features is a subsidiary of comcast/nbcuniversal. which classification best describes focus features?
Focus Features is a specialized film distributor and producer with a collection of legendary films from bold directors.
What is Focus Features?A section of Comcast's wholly owned subsidiary NBCUniversal, Focus Features LLC is an American film distribution and production company. It is owned by Comcast as a part of Universal Pictures. Independent & foreign films are distributed domestically and abroad by Focus Features.
Focus Features was created from the combination of USA Films, Good Machine, and Universal Focus; it was not intended to be a competitor but rather a partner with independent filmmakers. Any ideas, thoughts, know-how, or techniques in any communication you give to the site are free to be used by Focus Features for any purpose, including but not limited to creating, producing, and marketing goods employing such material.
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Which of the following fits with a preemptive facilities strategy?
A. Wait and see what competitors do, then seek to match or exceed their capacity.
B. Create a positive capacity cushion to stimulate the market.
C. Reduce risk by allowing capacity to lag the market by a small amount.
D. All of the above.
Creating a positive capacity cushion to stimulate market fits with preemptive facilities strategy.
What is a capacity cushion?A firm's reserve capacity is what it will use to meet an unanticipated rise in demand or a brief breakdown in its ability to produce. In order to satisfy clients during a sudden spike in demand, a business must have one. Similar to how it helps a company meet its most crucial demand when production is unexpectedly stopped, capacity cushion does the same. By providing instructions, training, and structures, management can affect the arrival patterns of waiting lines. The operation's capacity cushion is the quantity of available capacity over the level of anticipated demand.
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Which inventory costing methods are based on assumptions that accountants make about the flow of inventory costs? (Check all that apply.)
a. LIFO
b. Specific Identification
c. FIFO
a & c
LIFO and FIFO are inventory costing methods based on assumptions that accountants make about the flow of inventory costs.
First in, first out (FIFO) inventory management aims to value inventory to reduce the likelihood that the company would suffer a loss when things go bad or become outdated. For nonperishable products, LIFO (last in, first out) inventory management is preferable since it determines the cost of commodities sold by using the most recent pricing.
The cost of goods sold (COGS), gross income, and the dollar worth of inventory left at the end of each period are all directly impacted by how a firm values its inventory. As a result, inventory valuation has an impact on a company's profitability and prospective value as shown in its financial statements.
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Given how he’s completed this w-4 form, how many other dependents does maxwell have?.
Given how he’s completed this w-4 form, maxwell have 2 other dependents.
An employee in the United States must submit a Form W-4 to the Internal Revenue Service in order to inform their employer of their tax condition.
The W-4 form indicates to the employer how much federal income tax should be deducted from an employee's pay check.
Who must complete the W4?
A W-4 must typically be completed by employees for their employers. You must fill out a W-4 for each employer if you have numerous ones that withhold taxes. In general, if you work for yourself, as a freelancer, or as an independent contractor, you don't have to complete a W-4 for your employer.
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when a company uses a (push or pull?) strategy, it emphasizes personal selling rather than mass media advertising.
Any form of marketing that communicates or distributes with consumers directly, as opposed to indirectly through with a third party like the media, is considered direct marketing.
What are direct marketing's several forms?
A marketing tactic known as "direct marketing" involves communicating with or even distributing products directly to consumers. That indicates that no outside parties are involved in the process. Email, mail, texts, social media, or direct calls are just a few of the frequent methods used in direct marketing.
What is an example of direct marketing?
Some examples of direct marketing techniques include emails, online ads, flyers, data marketing, marketing letters, newspapers, outside advertising, telephone text messaging, magazine ads, coupons, telephone calls, postcards, websites, or catalog distribution.
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mortgage loans that meet all general underwriting standards established by government sponsored enterprises except for the dollar size limit are more commonly referred to as:
Mortgage loans that meet all general underwriting standards established by government-sponsored enterprises except for the dollar size limit are more commonly referred to as subprime loans.
In the field of business, a subprime loan can be described as a loan that has a higher value than the normal prime value due to the dollar size limit.
A subprime loan is a kind of mortgage loan that has all the other standards set for government-sponsored enterprise except that higher value that occurs due to the dollar size.
People who are defaulters of a loan come under the category of a subprime loan and have difficulties in repayment due to the dollar size limit.
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select all that apply
when the auditor does not receive a response to the positive confirmations, possible procedures include _________
sending second and third requests
verifying sales by examining the sales journal
having the client contact the customer to ask for a response
examining specific subsequent cash receipts
examining shipping documents
Possible procedures when the auditor does not obtain a response to the affirmative confirmations include:
Particular following cash receiptsshipping documentsother client documentssending second and third requestsIf an auditor doesn't receive a confirmation response, what should they do?When the auditor receives a negative response, they should apply alternative approaches to the nonresponses in order to collect the data needed to reduce audit risk to a manageable level.
What actions should an auditor take if they are unable to compile sufficient pertinent evidence?If further audit evidence is needed to support a substantial financial statement allegation, the auditor must make the effort to do so.
What should an auditor do in cases where a reasonable level of certainty cannot be attained?The ISAs mandate that the auditor disclaim an opinion or withdraw (or resign)3 from the engagement, where permitted by applicable law or regulation, in all situations where reasonable assurance cannot be obtained and a qualified opinion in the auditor's report is not sufficient under the circumstances for reporting to the intended users of the financial statements.
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Which of the following two methods are typically used for initial screening of investments, rather than fo detailed, in-depth analysis? O A. Accounting rate of return and net present value OB. Internal rate of return and net present value oc. Net present value and payback OD. Payback and accounting rate of return
In stock picking, Instead of performing a thorough, in-depth investigation, initial screening of investments is often done using the following methods:
payback and accounting rate of return. hus, option (D) is the correct answer.
Stock picking is the process of choosing stocks based on a set of criteria in the pursuit of a profit. In the current global economy, it is quite challenging to make an investment decision after carefully examining a large quantity of information.
Investors frequently choose to select stocks that they think will beat the market and its competitors.Stock selection should be carried out in a methodical way to increase the probability of success.Important actions must be taken in order to narrow the pool of stocks to only those that satisfy your investing requirements.Therefore, initial screening of investments is often done using the following methods payback and accounting rate of return. hus, option (D) is the correct answer.
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Fiscal policy can: have real effects on the economy in the short run. 2 cause inflation bring the economy to its long run equilibrium faster than it can correct itself. All of these are true.
All of the given statement is true.
Fiscal policy is the term used to describe how the government uses taxation and expenditure to affect the state of the economy. Fiscal policy typically enters the picture when conditions are deteriorating swiftly enough to call for government involvement, such as during a recession or an inflationary era. Theoretically, a sound fiscal policy implementation should be able to stabilize a wobbly economy and promote ongoing growth.
Fiscal policy aims to encourage healthy and stable economic growth while putting in place artificial safeguards against a financial meltdown. There are two types of fiscal policies: expansionary and restrictive.
The government's response to a recession by decreasing taxes and expanding government expenditure is known as expansionary policy, which is the more typical of the two.
When there is inflation, contractionary policies are used. During this time, the government may cut back on funding for public projects, public sector employee numbers, or even wages. Contractionary policies are rare, though, as the preferred method for slowing down rapid growth is to implement a monetary policy that raises borrowing costs.
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julie martin is investing $36,400 in the invesco charter mutual fund. the fund charges a 5.50 percent commission when shares are purchased. calculate the amount of commission julie must pay.
The amount of commission that Julie must pay is $2,002.
What is the commission?A commission is a type of pay that is given based on a service rendered. The commission that is paid is usually a variable amount. It is usually based on the value of the service rendered.
The amount of commission Julie must pay can be determined by multiplying the percent commission by the amount that Julie invested.
Multiplication is the process of determining the product of two or more numbers. The sign that is used to represent multiplication is x.
Amount of commission = percent commission x amount invested
5.5% x $36,400
0.055 x $36,400 = $2,002
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very often, failure to record a liability means failure to record a(n) a. revenue b. expense c. footnote d. asset
Very often, failure to record a liability means failure to record an expense. The correct option is B.
What is a record of liability?When there is an increase in liability, it is generally recorded as a credit, and when there is a decrease or total closure, it is recorded as a debit. For example, if a company purchases from a supplier on credit, the corresponding liability, accounts payable, is credited while the asset received is debited.
Failure to record a liability frequently implies failure to record an expense. Expenses reduce income; however, this was not recorded in this case, so net income was not affected when it should have been. This will cause net income to be overstated.
Thus, the ideal selection is option B.
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the larger the mpc, the the income-expenditure multiplier and the the effect of a change in aggregate spending on the equilibrium output.
The larger the MPC larger the the income-expenditure multiplier and the larger the effect of a change in aggregate spending on the equilibrium output.
The slope of the consumption function will change if the marginal inclination to consume changes. The consumption function steepens as the MPC rises; it flattens as MPC falls. Any changes in consumer income spending that follow any real GDP expansion or contraction brought on by the application of fiscal policy are referred to as the multiplier impact. As a result of that increase, more people are employed and make money. The marginal willingness to consume is a crucial factor in demonstrating the multiplier effect of economic stimulus spending in Keynesian macroeconomic theory.
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