Jones purchase the stock of Smithon outright leaving Smithon intact? The stock should not be purchase by Mr. Jones. Mr. Jones acquiring the assets, liabilities and also would inherit the contractual obligations of the selling corporation, would, be the results of the purchase. In lay terms, he has bought the existing Smithon Corporation and he is responsible of ensuring daily operations run efficiently but the tax aspect of acquisition he is responsible for existing and any future tax liabilities that the selling corporation had. It would be my advice for Mr. Jones to not buy the stock because of the liability of current and future tax obligations which Mr. Jones would incur from the purchase of the stock.
Market failure refers to a situation in which the market does not allocate resources efficiently. ANSWER: T TYPE: T KEY1: D SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxxii]. Since taxes affect only the price paid by the buyer, they cannot have an adverse impact on the allocation of society’s resources. ANSWER: F TYPE: T KEY1: C SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxxiii]. A monopolist has market power.
If the spread is positive, the banks will “always” borrows from other banks. This equals no effect on the money supply. If the Fed wants to restrict the money supply, they may raise the discount rate so that banks and lenders are discouraged from borrowing from the Federal Reserve Bank (McConnell & Brue, 2004). The Fed mandates the required reserve ratio (RRR) for banks and other financial institutions. This ratio determines the dollar amount a financial institution
Breach of Contract is one of the most common defenses raised by a party to a negotiable instrument. If there is a breach of contract and there was in this case this particular personal defense is effective only against an ordinary holder. Since Mortgage Finance is a holder in due course the Mahaffey’s cannot assert any personal defenses against Mortgage Finance. The Mahaffey’s can sue Five Star but will probably lose because the Mahaffey have no leverage against Five Star and the court action can be expensive and time consuming. However, the FTC rule which eliminates HDC status with regard to negotiable instruments arising out of certain consumer credit transactions can be asserted to prevent enforcement of a note that arose from a covered
Since, the FED set the interest rate in which the banks borrow from, Edgars’ ability to borrow enough money or establish a line of credit to start his business will be affected by inflation, interest rate and financial policies. However, in some situations, an unanticipated inflation can benefit Edgar, as this type of situation whenever inflation rates are underestimated for the life of a loan, the bank loses and Edgar will
The cable companies get away with this by claiming they do not have competition, cities award them the contract by providing coverage, even though they may not have the lowest price. So who’s to say that state regulators from unofficially granting a monopoly to a provider with incentives? The monopolies set their price high, politicians reap the rewards and were forced to take it and like it, or go without. Other monopolies that doing business in this manner are electric companies, transportation and telephone companies. Financial markets are another element in our economy which the government once again has their hands in our pockets.
The question we all as taxpayers should be asking is whether or not we will see a good return on our investment. The Democratic proposal is a bit more negotiable since the taxpayers would at least own an equity interest in these companies. However, even that modified plan seems too expensive and way too intrusive. We should consider alternative plans that are not quite as intrusive to market mechanisms such as the Lindt plan. The Paulson plan also seems to signal a dangerous shift away from liberal market mechanisms into an age of neo-mercantilism.
The much more divisive question is whether the government should preserve the benefits that the companies provide to middle-class borrowers, including lower interest rates, lenient terms and the ability to get a mortgage even when banks are not making other kinds of loans. Douglas J. Elliott, a financial policy fellow at the Brookings Institution, said Congress was being forced for the first time in decades to grapple with the cost of subsidizing middle-class mortgages. The collapse of Fannie and Freddie took with it the pretense that the government could do so at no risk to taxpayers, he
“The most important provision of this act however is the prevention of anticompetitive mergers. This occurs when a company buys a competing firm. While most mergers allow the companies to create better quality goods at less expensive prices, some mergers limit competition and make price fixing easier. This part of the act was designed to prevent mergers from creating monopolies” (Ellsworth, 4). This section of the Clayton act wanted to promote free trade and keep smaller businesses from getting too greedy.
Therefore, understanding exactly how monetary policies will affect the economy is extremely important. Monetary policies generally will raise or lower interest rates, which will ultimately affect individuals and business demand for goods and services. Unfortunately, many individuals do not understand the entire concept surrounding the Federal Reserve real interest rate. For example, any magnitude of decreasing the real rates will lower the cost of borrowing; this will increase investment spending, and influence individuals to buy durable goods. These items may consist of automotive, recreational vehicle, homes, and higher educational opportunities.