Answer: b. debited; credited
Explanation:
Deferred revenue has been paid to the company but the company does not recognize it as revenue yet because the goods or services it was paid for have not been delivered yet. It will therefore be classified as a liability until the goods or services are delivered. It will therefore be credited because increases in liabilities are credited.
Accounts Receivable is an asset account and as such any increase in it will be debited.
Banc Corp. Trust estimates that it costs $500 to analyze and close a commercial loan. This amount has been included in the $396,000 of overhead costs. How much of the remaining overhead costs should be allocated to the Consumer Department?
Complete question :
Banc Corp. Trust is considering either a bankwide overhead rate or department overhead rates to allocate $396,000 of indirect costs. The bankwide rate couldbe based on either direct labor hours (DLH) or the number of loans processed. The departmental rates would be based on direct labor hours for ConsumerLoans and a dual rate based on direct labor hours and the number of loans processed for Commercial Loans. The following information was gathered for the upcoming period.
Dept - - - - - - - DLH - - loan processed - - - d/cost
Consumer - 14000 - - - 700 - - - - - - - - 280,000
Commercial - 8000 - - 300 - - - - - - - 180,000
Banc Corp. Trust estimates that it costs $500 to analyze and close a commercial loan. This amount has been included in the $396,000 of overhead costs. How much of the remaining overhead costs should be allocated to the Consumer Department?
Answer:
$172,200
Explanation:
Number of commercial loans processed = 300
Cost of processing a commercial loan = $500
Overhead cost = $396,000
Total cost = 300 * $500 = $150,000
Overhead left = $(396,000 - 150,000) = $246,000
Overhead sharing between commercial and consumer department :
Total loans = (300 + 700) = 1000
Number of consumer department loan = 700
Consumer department overhead :
(246,000 / 1000) * 700
246 * 700 = $172,200
A 50-year old customer is in a very low tax bracket. She lives in a state that has one of the highest income tax rates. The customer is seeking income and preservation of capital. She has a 10 year investment time horizon. The best r
ecommendation would be a 10 year maturity:__________
a. Treasury Bond
b. investment grade corporate bond
c. investment grade municipal bond
d. Treasury STRIPS
Answer:
b. investment grade corporate bond
Explanation:
Credit rating is used to show the reliability of a security. The Investment Grade is a credit rating the is low risk bond. There is low possiblity of default on this type of investment.
Medium rating of A and BBB represent the investment grade corporate bond.
This is an attractive investment for the more conservative investor.
This is an ideal investment choice for the 50-year old customer with very low tax bracket, in a state with high income tax rates. So she is seeking income and preservation of capital.
The best recommendation for the 5o-year-old customer would be 10- year maturity that is known as an investment-grade corporate bond.
Bonds rated "investment-grade" are considered to just have positive significant credit ratings and a low risk of default. Top companies may benefit from their status as investment-grade credits, resulting in lower interest rates.
A corporate or municipal bond with an investment-grade rating has a relatively low risk of default. Companies with a "AAA" rating are considered the least likely to default, according to Standard and Poors.
Businesses that Moody deems to be the least probable to happen start receiving an "Aaa" rank.
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Olympia Marketing has instituted new policies around misappropriation of assets, conflicts of interests, and kickbacks. Also with the local elections just around the corner, management sent out reminders about political contributions and confidentiality of company information. All of these policies can be found in Olympia Marketing's
a) employee handbook
b) policies and procedures manual
c) moral rights
d) approach C
Answer:
b) policies and procedures manual.
Explanation:
A company's policies and procedures manual is essential for establishing norms and rules that will guide the company's operation.
Through corporate policies, it is possible to determine actions, conducts, practices and values that the company adopts in order to achieve its objectives and goals, and demonstrate what are its fundamental values that give this organization its own identity and the foundations that will make it different from other companies in the competitive market.
Option A requires eight years of higher education and $80,000, while option B
requires four years of higher education and $45,000. Option B requires
time and
money
Answer:
A less,less
Explanation:
because option A requires 8 year of higher education and $80,000. but option B only requires four years of higher education and $40,000
Option A requires eight years of higher education and $80,000, while option B requires four years of higher education and $45,000. Option B requires less time and less money because option A requires 8 years of higher education and $80,000 but option B only requires four years of higher education and $40,000. Thus, option 'A' is the correct option.
What do cost and time effective mean?Business managers must deal with two fundamental issues: time and expenses. These two topics have a lot in common. For instance, you can incur a fee and an increase in costs if you miss a deadline. Similarly to this, if money is tight you could feel pressured to finish a project sooner in order to cut down on labour costs. Thus, managing time and expenditures concurrently provide several advantages for your company.
When practising time and cost management, it is frequently impossible to complete all of the original recommendations. You eventually learn to set priorities and choose which initiatives are worthy of your time, money, and attention. You must discover strategies to improve your efficiency if you want to accomplish more with the money and time you have available.
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Quality data gathering, analysis, and reporting $59,000 Testing and inspection of incoming materials $48,000 Final product testing and inspection $27,000 Depreciation of test equipment $30,000 Cost of field servicing and handling complaints $52,000 Disposal of defective products $13,000 Downtime caused by quality problems $52,000 Technical support provided to suppliers $18,000 Returns arising from quality problems $39,000 Eagle Company's quality cost report is to be based on the data shown. What would be the total appraisal cost appearing on the quality cost report? Question 17 options: A) $78,000 B) $75,000 C) $105,000 D) $100,000
Answer:
$75,000
Explanation:
Calculation for What would be the total appraisal cost appearing on the quality cost report
Total Appraisal cost= Addition of
Testing and inspection of incoming materials and Final product testing and inspection
Hence ,
Total Appraisal cost =Testing and inspection of incoming materials $48,000 + Final product testing and inspection $27,000
Total Appraisal cost =$75,000
Therefore the Total Appraisal cost appearing on the quality cost report will be $75,000
John manufactures household furniture. His start-up costs, including tools, plans, and advertising, total \$5000$5000dollar sign, 5000. Labor and materials for each piece of furniture total \$350$350dollar sign, 350, and his production costs are the sum of his start-up costs plus the cost of labor and materials. If John makes fff pieces of furniture, what will be his production costs, ccc, in dollars
Answer:
$5,000 + $350f
Explanation:
The computation of the production cost in dollars is shown
Here we use the equation form
The start up cost is $5,000
Labor, material cost $350
Now if he makes f pieces of furniture so, his production cost would be
= Startup cost + labor, material cost
= $5,000 + $350f
Hence, this is the answer and the same is to be provided
Kela Corporation reports net income of $450,000 that includes depreciation expense of $70,000. Also, cash of $50,000 was borrowed on a 5-year note payable. Based on this data, total cash inflows from operating activities are:
Answer:
$520,000
Explanation:
Kela corporation reports a net income of $450,000
The depreciation is $70,000
A cash of $50,000 was borrowed on a 5-year note payable
Therefore, the total cash inflows from operating activities can be calculated as follows
= Net income+depreciation
= $450,000+$70,000
= $520,000
Hence the total cash inflow from operating activities is $520,000
Janis owns and operates a store in a country experiencing a high rate of inflation. In order to prevent the value of money in her cash register from falling too quickly, Janis sends an employee to the bank four times per day to make deposits in a interest-bearing account that protects the store's revenues from the effects of inflation.(a) This is an example of the:i. menu costsii. unit of account costsiii. shoe leather costs of inflation.(b) Explain briefly the nature of the costs imposed.
Answer:
shoe leather costs
Explanation:
The shoe-leather cost is the cost that deals in time and effort which people spent against the inflation effect i.e reduction in inflation like less cash held so that it would make extra trips to the bank
Also if the inflation of the economy rises so the consumer spending would be less as it directly affects the purchasing power of the customer
So the time and cost effort spent is known as shoe leather cost
Marquez, the hotel manager, knows that the number of guests at his hotel has significantly decreased. Therefore, corporate has made it clear that the amount each department can spend on certain items will need to be cut for the year. Marquez needs to work with the hotel department managers on how to cut costs, as a part of his role as
Answer:
Resource allocator.
Explanation:
Marquez, the hotel manager, knows that the number of guests at his hotel has significantly decreased. Therefore, corporate has made it clear that the amount each department can spend on certain items will need to be cut for the year. Marquez needs to work with the hotel department managers on how to cut costs, as a part of his role as resource allocator.
A resource allocator can be defined as an individual who is saddled with the responsibility of assigning and management of available or scarce resources to effective use.
This is a strategic process which helps a business entity or organization to achieve its goals, objectives and success by efficiently avoiding wastage.
Muir Manufacturing produces two popular grades of commercial carpeting among its many other products. In the coming production period, Muir needs to decide, how many rolls of each grade should be produced in order to maximize profit? Each roll of Grade X carpet uses 50 units of synthetic-fiber, requires 25 hours of production time, and needs 20 units of foam backing. Each roll of Grade Y carpet uses 40 units of synthetic-fiber, requires 28 hours of production time, and needs 15 units of foam backing.
The profit per roll of Grade X carpet is $200 and the profit per roll of Grade Y carpet is $160. In the coming production period, Muir has 3000 units of synthetic-fiber available for use. Workers have been scheduled to provide at least 1800 hours of production time (overtime is a possibility). The company has 1500 units of foam backing available for use. Develop a linear programming model for this problem.
1. Define the Decision Variables.
2. Write the Objective.
3. Write the Constraints.
Answer:
Kindly check explanation
Explanation:
A) DECISION VARIABLES :
The decision variables in the question above lies in Muir Manufacturing Company's Production target in the coming production period:
The decision variables are thus:
1) Determining the number of rolls of Grade X carpet to manufacture.
11) Determining the number of Grade Y carpet to manufacture.
2) OBJECTIVES :
The objective is to maximize profit :
Profit per roll of Grade X carpet = $200
Profit per roll of Grade Y carpet = $160
The objective function is thus :
$200x + $160y
C.) THE CONSTRAINTS :
1) Synthetic fibre required:
Grade X = 50 units
Grade Y = 40 units
Total available units = 3000
50X + 40Y ≤ 3000
Production time:
Grade X = 25 hours of production time
Grade Y = 28 hours of production time
Scheduled production time to be provided by workers is atleast 1800 hours (since there is possibility for overtime).
25X + 28Y ≥ 1800
111) Foam backing required:
Grade X = 20 units
Grade Y = 10 units
Total available units = 1500
20X + 10Y ≤ 1500
Each roll of Grade X carpet uses 50 units of synthetic-fiber, requires 25 hours of production time, and needs 20 units of foam backing. Each roll of Grade Y carpet uses 40 units of synthetic-fiber, requires 28 hours of production time, and needs 15 units of foam backing.
Marc and michelle are married and earned salaries this year of $69,200 and $13,950, respectively. in addition to their salaries, they received interest of $350 from municipal bonds and $1,150 from corporate bonds. marc and michelle also paid $3,150 of qualifying moving expenses, and marc paid alimony to a prior spouse in the amount of $2,150. marc and michelle have a 10-year-old son, matthew, who lived with them throughout the entire year. thus, marc and michelle are allowed to claim a $1,000 child tax credit for matthew. marc and michelle paid $7,300 of expenditures that qualify as itemized deductions and they had a total of $6,330 in federal income taxes withheld from their paychecks during the course of the year. (use the tax rate schedules. )
Part of question :
What is the total amount of Marc and Michelle's deductions from AGI?
Answer and Explanation:
Let's assume Marc and Michelle are filing a joint tax return.
Total salaries from Marc and Michelle = $69200+$13950 = $ 83150
interest on corporate bonds which is taxable = $1150
total income = $ 83150+$1150= $84300
deductions include:
The IRA contribution =$ 3150
The alimony to ex wife= $ 2150
Total deduction = $ 5300
Agreegate income= $ 84300-$5300=$79000
Marc and Michelle have options to choose standard deduction of $24000 from AGI or itemised deduction of 2% of AGI=$1580
From here, it is better to take the standard deduction option as it reduces taxable income
Therefore taxable income =$79000-$24000=$55000
Total deduction=$24000
Thorley Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC or negative, in both cases it will be rejected. Year 0 1 2 3 4 5 Cash flows -$1,100 $325 $325 $325 $325 $325
Answer:
IRR = 14.59%
Explanation:
Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested
IRR can be calculated using a financial calculator
Cash flow in year 0 = -$1,100
Cash flow in year 1 = $325
Cash flow in year 2 = $325
Cash flow in year 3 = $325
Cash flow in year 4 = $325
Cash flow in year 5 = $325
IRR = 14.59%
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
When it is time for Margaret to provide performance appraisals, she organizes her subordinates in a list from best employee to worst employee. Which method does Margaret most likely use
Answer:
Ranking method
Explanation:
Ranking method for performance appraisal is the oldest, and it involves the use of rankings in evaluating the performance of employees. Employees are usually organized depending on their worth; they are ranked in different categories from the highest performance to the lowest performance or from the best employee to the worst employee. This type of method compares between employees.
Rodrigo wanted to buy his wife a pearl necklace for her birthday. Murphy's Jewelry had a necklace he liked for $139, but he bought the same necklace at Pearls for Her. This pearl necklace was originally $173.75, but was on sale for 20% off, which reduced the price to $139. He was very pleased with his bargain. Rodrigo is subject to:
Answer:
a framing bias.
Explanation:
given data
necklace he liked = $139
pearl necklace originally = $173.75
sale for = 20% off
reduced the price = $139
solution
Rodrigo is subject to readymade bias. This bias refers to how people’s decisions affect situations, words, or settings. Although both stores have the same price, Pearl’s own stores create a relative factor It showed a high base price and a 20% discount, which made Rodrigo feel like he was making a deal, so he was more inclined to buy the necklace and not at the Murphy jewelry store.Margarita, age 30, used to work 80 hours a week as a corporate lawyer. this year she quit her job to take care of her five-month-old daughter. she is currently not looking for a job. the survey conducted by the bureau of labor statistics will count margarita today as choose one:
a. not in the labor force.
b. not in the working-age population.
c. a discouraged worker.
d. employed.
e. unemployed.
Answer: a) Not in the labor force
Explanation:
The category of people not in the labour force are those who either have no interest in working for someone, have retired, or has resigned(with no intentions to work for anyone). This category of persons have no interest in taking up job positions as they want to either rest, face another aspect of their life or can't work again due to their age. Margarita is in the category of those not in the labour force as she looks towards taking care of her daughter and won't be in for any job at the moment.
Century Real Estate’s primary broker is John Kerr. John is licensed as the broker of that company and he is licensed as a broker sales associate in his brother-in-law’s firm of Boch Real Estate, where John only works once a week or so. In this case:
Answer:
The broker is doing two different jobs; so it is okay to have two different licenses.
Explanation:
In this case, since the broker is doing two different jobs then it is okay for him to have two different licenses. In a hypothetical case that the individual Broker was doing the same job role for two different companies then that would be considered a form of conflict of interest and may cause problems with both firms in the future. Since this is not the case, then he should not have any problem.
Paris Corporation has 17,000 shares of $60 par common stock outstanding. On August 2, Paris Corporation declared a 3% stock dividend to be issued October 8 to stockholders of record on September 15. The market price of the stock was $82 per share on August 2.
Journalize the entries required on August 2, September 15, and October 8. If an amount box does not require an entry, leave it blank. If no entry is required, select "No entry required" and leave the amount boxes blank.
Aug. 2 Stock Dividends
Stock Dividends Distributable
Paid-In Capital in Excess of Par-Common Stock
Sept. 15 No entry required
No entry required
Oct. 8 Stock Dividends Distributable
Common Stock
Answer:
Date General Journal Debit Credit
Aug 2. Stock Dividend $41,820
(17,000 * 3% * $82)
Stock Dividend Distributable $30,600
(17,000 * 3% * $60)
Paid-in-Capital in Excess of Par- $11,220
Common stock
Sept. 15 No Entry required
Oct. 8 Stock Dividend Distributable $30,600
Common Stock $30,600
A broker arrives to present a purchase offer to a disabled woman and finds her son and his wife also present. In the presence of the broker, both individuals persistently urge the woman to accept the offer, even though it is much lower than the price she has been asking for her home. If the woman accepts the offer, she may later claim that
Answer:
she was under undue influence from her son and daughter in law and therefore the contract is voidable
Explanation:
Since in the question it is mentioned that the broker made a purchase offer to a disabled woman also his wife and her son are present. The price is very much lower and in the case when the women accept the offer and later she said due to pressure she accepted the offer.
As she is a disabled person and the people who are disabled, blind, are not capable to enter into a contract
Therefore the contract is voidable
Able Co. uses an online sales order processing system to process its sales transactions. Able's sales data are electronically sorted and subjected to edit checks. A direct output of the edit checks most likely would be a
Answer: D. File of all rejected sales transactions.
Explanation;
When Edit Checks are applied to sales transactions, the transactions will be checked for issues such as completeness, reasonableness and validity amongst others. If the transactions do not satisfy these, they will be rejected.
After they are rejected, the Edit Checks utility would record these rejections in a file so that the company can evaluate them for errors, correct the errors and then resubmit the transactions.
On March 1, Lincoln sold merchandise on account to Windsor Company for $29,200, terms 1/10, net 45. On March 6, Windsor returns merchandise with a sales price of $2,700. On March 11, Lincoln receives payment from Windsor for the balance due. Prepare journal entries to record the March transactions on Lincoln’s books.
Answer:
Journal entries
Date Account title and explanation Debit Credit
Mar 1 Account receivable $29,200
Sales revenue $29,200
Mar 6 Sales return and allowance $2,700
Account receivable $2,700
Mar 11 Cash $26,235
($26,500 * 99%)
Sales discount $265
Account receivable $26,500
($29,200 - $2,700)
To take into consideration demand uncertainty in reorder point (R) calculations, what do we add to the product of the average daily demand and lead time in days when calculating the value of R
Answer:
The answer is "The result of the standard deviation of request and a 'z' rating over a certain possibility of operation".
Explanation:
When we have determined 10 units per day for standard deviation with supply, while the period to ordering in 5 days. Its standard 5-day duration is or the equation 17.8, which is multiplied by the z-score, which is the equation 17.9 has as long as per day is selected based, that's why the result of normal volatility of request as well as a 'z' score over a certain possibility of service is correct.
The Cash account in the ledger of Hensley, Inc. showed a balance of $3,100 at June 30. The bank statement, however, showed a balance of $3,900 at the same date. The only reconciling items consisted of a $700 deposit in transit, a bank service charge of $7, and a large number of outstanding checks.1. Refer to the above data. Upon completion of the bank reconciliation, a journal entry will be required to update the depositor's accounting records. This entry will inchude:______.a) a credit to Cash for $700. b) a debit to Cash for $700. c) a debit to Cash for $7. d) a debit to Bank Service Charge Expense for $7. 2. Refer to the above data. What is the total amount of the oustanding chocks a Tone 30?A) $1,513. B) $1,486.C) $1,507.D) Some other amount.
Answer:
1. d) a debit to Bank Service Charge Expense
2.d) Some other amount.
Explanation:
1. No journal entries are prepared to record deposits in transit and outstanding checks because these items have already been recorded in the books. Therefore, only one journal entry will be required to record the bank service charge of $7. The bank service charge is an expense and will be recorded by debiting bank service charge expense account and crediting cash by $7.
2. Total amount of outstanding checks = Balance per bank statement + Deposit in transit - Balance per books - Bank service charge
Total amount of outstanding checks = $3,900 + $700 - $3,100 - $7
Total amount of outstanding checks = $1,493
Which of the following is NOT a person as defined by the Uniform Securities Act?
A) A small unincorporated investment club.
B) Guelph, a small city outside of Toronto, Ontario, that maintains an investment account at a brokerage house to invest surplus funds.
C) A child prodigy for whom his mother, as custodian, opened an account at a major securities firm.
D) XYZ Dry Cleaners, Inc., whose shareholders all work on the premises and also offer financial advice to customers who request it.
Answer:
C) A child prodigy for whom his mother, as custodian, opened an account at a major securities firm.
Explanation:
The Uniform Securities Act is statute that guides state on how they design their securities laws. The Security and Exchange Commission set up these guides to protect investors from securities fraud at the state level
According to the Uniform Securities Act a person is an individual, trust, corporation, unincorporated company, government, or a division of government that enters into a legal contract.
A child is not able to enter into a legally binding contract, so they are not considered to be a person according to the Uniform Securities Act.
An adult can be the only individual considered as a person. They can open the account on behalf of the child
At January 1, 2016, Bonita Industries has beginning inventory of 1500 surfboards. Bonita estimates it will sell 6000 units during the first quarter of 2016 with a 12% increase in sales each quarter. Bonita’s policy is to maintain an ending inventory equal to 25% of the next quarter’s sales. Each surfboard costs $100 and is sold for $150. How much is budgeted sales revenue for the third quarter of 2016
Answer: $1,128,960
Explanation:
The budgeted sales revenue is the financial estimate of the amount that a company is expecting to make for a particular period of time.
Based on the information given in the question, the budgeted sales revenue for the third quarter of 2016 will be:
= 6000 × (1 + 12%) × (1 + 12%) × $150
= 6000 × (1 + 0.12) × (1 + 0.12) × $150
= 6000 × 1.12 × 1.12 × $150
= $1,128,960
Which of the following was the first emission control device?
A.Muffler
B.Catalytic converter
C.PCV Valve
D.HO2S Sensor
Answer:
The answer is A. The Muffler
Explanation:
The first muffler for cars was designed in 1897.
The function of the car muffler is to slow down the speed of movement of the exhaust gases, which helps to smooth the movements of the engine, reduce the temperature of the gases and reduce the emissions of substances that are harmful to the environment.
A broker from Nebraska wants a license in Florida. He takes a written exam of 40 questions and passes 35 of them. The broker has taken advantage of the written agreements between the states for real estate licensing. This is an example of:
Answer:
A mutual recognition agreement between the states of Florida and Nebraska, created for real estate licensing.
Explanation:
A mutual recognition agreement is defined as a situation where 2 more countries recognise conformity examination results of each other. So a person that writes an examination and passes in one location can get a liscence in another country based on his exam results.
In the given scenario a broker from Nebraska wants a license in Florida. He takes a written exam of 40 questions and passes 35 of them.
After passing the exam he is able to obtain a real estate liscence in Florida.
This is an example of Mutual recognition agreement between Nebraska and Florida.
You are interested in purchasing a digital camera and find one priced extremely low. As you are about to purchase the camera, you discover that it does not come with a power cord, memory card, or battery. You purchase all of these separately. The total cost surpasses what you would have paid at another store that listed the camera at a higher price, but included all the accessories. You have been a victim of the _______ technique.
Answer:
low-ball technique
Explanation:
Based on the scenario being described it seems that you have been a victim of the low-ball technique. This is a persuasion tactic in which an item is marked at a very tempting low price in order to get customers to commit to the purchase, but when they do commit the price is increased in one way or another. Which in this case was by requiring extra components to be able to use the camera.
Palencia Paints Corporation has a target capital structure of 25% debt and 75% common equity, with no preferred stock. Its before-tax cost of debt is 13%, and its marginal tax rate is 40%. The current stock price is P0 = $22.00. The last dividend was D0 = $3.00, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC? Round your answers to two decimal places. Do not round your intermediate calculations.
Answer:
cost of common equity is 18.64%.
WACC is 15.93 %.
Explanation:
Cost of Equity is the return that is required by providers of Capital in form of Common Stocks.
This can be determined using the Growth Model as the information permits use of such method.
Cost of Equity = Current Dividend / Current Market Price + Expected Growth Rate
= $3.00 / $22.00 + 0.05
= 0.1864 or 18.64%
WACC = Ke × (E/V) + Kd × (D/V) + Kp × (P/V)
where,
Ke = cost of equity
= 18.64%
E/V = Weight of Equity
= 75%
Kd = cost of debt
= Interest × (1 - market rate)
= 0.13 × (1 - 0.40)
= 0.078 or 7.80 %
D/V = Weight of Debt
= 25%
Therefore,
WACC = 18.64% × 75% + 7.80 % × 25%
= 15.93 %
In terms of market efficiency, short selling most likely: Group of answer choices leads to excess volatility, which reduces market efficiency. has little effect on market efficiency because short sellers face the risk of unlimited losses. promotes market efficiency by making assets less likely to become overvalued.
Answer:
promotes market efficiency by making assets less likely to become overvalued.
Explanation:
Market efficiency can be defined as a measure of the degree to which prices in a market reflect all available and significant information at a specific period of time. A market is said to be efficient when all information has been incorporated into the prices of goods and services, and as such it is impossible to "beat" the market because there are no overvalued or undervalued stock.
In terms of market efficiency, short selling most likely promotes market efficiency by making assets less likely to become overvalued, because stocks are usually not allowed to be overpriced before selling them.
Which of the following are arguments in favor of active stabilization policy by the government? Check all that apply. The Fed can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates. Businesses make investment plans many months in advance. The current tax system acts as an automatic stabilizer. Changes in government purchases and taxation must be passed by both houses of Congress and signed b
Answer: Fed can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates.
Explanation:
The Active Stabilization policy calls for the Government to actively try to reduce fluctuations in an economy by using monetary and fiscal policy tools.
Arguments for this policy believe that fluctuations in the economy are caused by excessive optimism and pessimism amongst market participants. In cases therefore where there is excessive pessimism, the Government should expand money supply and lower interest rates to spur investment and remove the pessimistic mood of the market.
