Answer:
A
Explanation:
Which theory would most likely explain why a commercial bank, which usually focuses on short-term securities, would switch to long-term securities due to a change in interest rates. pure expectation liquidity premium segmented market preferred habitat
Answer:
preferred habitat
Explanation:
According to the preferred habitat theory, if the expected returns from investment of a particular investment maturity is large enough, investors would shift from their preferred maturities.
In this question, there is a shift from the preferred maturity (short-term securities) to a long-term securities when interest rate changes
The pure expectations theory assumes that bonds of any maturity are perfect substitutes for each other. For example, if an investor buys a 10 year bond and holds it for 1 year, the return is the same as buying a 1 year bond. The theory also assumes that risk premium does not exist and a security only earns its risk free rate
Liquidity premium theory states that risk premium increases with the maturity of a bond. The theory predicts that the yield curve is upward sloping due to liquidity premium
According to the segmented market theory, each bond maturity segment can be thought of as a segment market in which yield are a function of the demand and supply for funds in that maturity.
Dave's Duds reported cost of goods sold of $1,600,000 this year. The inventory account increased by $130,000 during the year to an ending balance of $465,000. What was the cost of merchandise that Dave's purchased during the year?
Answer:
$1,730,000
Explanation:
Calculation to determine the cost of merchandise that Dave's purchased during the year
COGS $1,600,000
Add: Increase in inventories $130,000
Purchases $1,730,000
($1,600,000+$130,000)
Therefore the cost of merchandise that Dave's purchased during the year is $1,730,000
Carol Co. prepares a statement of cash flows starting with net income and then adjusting for items necessary to obtain net cash provided or used by operating activities. Carol Co. must be using the______method of reporting the statement of cash flows.
Answer:
indirect
Explanation:
From the question we are informed about Carol Co. prepares a statement of cash flows which start with net income and then adjusting for items necessary to obtain net cash provided or used by operating activities. In this case, Carol Co. must be using the
indirect method of reporting the statement of cash flows. In financial accounting, cash flow statement can be regarded as financial statement which express the way changes in balance sheet accounts as well as income affect cash and cash equivalents, and also give the analysis breakdown to operating, financing as well as investingactivities.
The methods for reporting statement of cash flows could be Direct or indirect method.
The indirect method can be regarded as method that gives presentation of the statement of cash flows by strating
with net income or net loss, along with deduction or additions to the amount for non-cash revenue and expense items or from them which comes subsequently, which then results to cash flow from operating activities.
Three months of rent were prepaid on May 1 for $7,200, but two months have now expired, leaving only one month prepaid at June 30. What is the amount of rent expense that will be recorded in the related adjusting entry dated June 30?a- $0b- $2,400c- $4,800d- $7,200
Answer:
b- $2,400
Explanation:
The computation of the amount that should be recorded is given below:
= 3 months rent ÷ number of months
= $7,200 ÷ 3 months
= $2,400
Hence, the amount of rent that should be recorded is $2,400
Therefore the option b is correct
The same should be considered
Last month, the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit. This month, the company supplied the same quantity of binders at $4 per unit. Based on this evidence, Tecumseh has experienced:_________.
a. a decrease in supply
b. an increase in supply
c. an increase in the quantity supplied
d. a decrease in the quantity supplied.
Answer:
B
Explanation:
according to the law of supply, the higher the price, the higher the quantity supplied and the lower the price, the lower the quantity supplied
in this question, there was only a change in price but no change in the quantity supplied.
so a change in supply and not a change in the quantity supply occured
determine supply per price
400 / 6 = 67
400 / 4 = 100
supply increased
A consumer has $180 in monthly income to spend on two goods, D and G, where D is on the y-axis. The price of good D, PD is $6, and the marginal rate of transformation is -2. How many units of good G can be purchased if all income is used to purchase good G
Answer:
The number of units of good G that can be purchased if all income is used to purchase good G is 15 units.
Explanation:
Since D is on the y-axis, indicating G is on the x-axis, the formula for calculating the marginal rate of transformation (MRT) is given as follows:
MRT = - PG / PD …………………. (1)
Where:
MRT = Marginal rate of transformation = -2
PG = Price of good G = ?
PD = Price of good D = $6
Substituting the relevant values into equation (1) and solve for PG, we have:
-2 = - PG / $6
PG = -2 * (-6) = $12
Therefore, we have:
Number units of good G if all income is spent on it = Monthly income / PG = $180 / $12 = 15
Therefore, the number of units of good G that can be purchased if all income is used to purchase good G is 15 units.
