Lower reserve requirements will result in more funds being available to loan out. This should, in turn, increase the rate of economic growth. Conversely, a higher reserve requirement will reduce the availability of funds and should slow economic growth. In this case, we need to increase our rate of economic growth in response to the recession, so I choose to lower the reserve requirement. The reason I would make this choice is to stimulate lending to businesses, reduce unemployment and increase household income so that the economy could then recover naturally.
A type A merger would increase market power which would increase market share. Increase in market share would increase profitability. A merger is also recommended because with Smithon’s positive income can offset with Johnson’s negative income and would result in reduced tax liabilities. A merger redefines the business world which allows for improve corporate business strategies and philosophies along with stronger alliances and less competition. There are many reasons for a merger but the most important is to maximize its profits.
With privatization of social security, workers would be able to 'own' all or a portion of their Social Security contributions in an individual account. These funds would be invested in the financial markets, where individuals would have the chance to earn higher returns. The Economic Benefits The biggest beneficiary of any Social Security privatization would be the U.S. economy. Increased investment in private enterprise-whether through stocks or bonds-should create more economic opportunities and boost domestic growth. It may also contribute to greater productivity, resulting in a lower inflation rate that would help retirement savings go further.
The more recent costs are matched against current revenues. c. There will be a deferral of income tax. d. A company's future reported earnings will not be affected substantially by future price declines. 82. Which of the following is true regarding the use of LIFO for inventory valuation?
Inversely, when a share repurchase is seen as treasury stock, the cost of the treasury stock is naturally disclosed as a decrease in total shareholders’ equity. Alcoa would report the purchase of the treasury stock by debiting treasury stock and crediting cash for the charge of the purchase. The treasury stock ought to be disclosed independently in the shareholders' equity area of Alcoa’s balance sheet as an unallocated cut of shareholders' equity. These shares are treated as issued although not part of common stock outstanding. If subsequently resold for a sum larger than the cost, Alcoa should report for the sale of the treasury stock by debiting cash for the sale cost, crediting treasury stock for cost, and crediting additional paid-in capital from repurchased stock for the excess of the selling price over the cost.
They allow firms to adjust its product market portfolio and in this case diversify within markets of Pharmaceuticals. Mergers and acquisitions can reduce financial risk, increase market share and utilize research and development if managed properly [1]. However it has become conventional for companies to over pay for targets and suffer post-acquisition disorder to later sell off the entity at a loss down the road. The most prominent example of this would be the AOL-Time Warner merger. However, if the acquisition is managed properly the transaction can dramatically alter the competitive landscape giving them a competitive advantage over their rivals.
Monetary policy is the use of interest rates to manipulate the level of aggregate demand in the economy and loose (expansionary) monetary policy is a reduction in the interest rates. This will result in an injection of extra consumption because it is cheaper to borrow money on credit cards and therefore allowing consumers to spend more which will cause an increase in aggregate demand (AD). Additionally, extra consumption will allow shops to gain more profit preventing “business failures.” Furthermore, mortgages will be cheaper and therefore consumers feel richer and there will an extra injection of consumption. AD will also increase due to an increase in investment, causing an increase in aggregate demand from AD1 to AD2 as shown below. However,
Warren Buffet What is the possible meaning of the changes in stock price for Berkshire Hathaway and Scottish Power plc on the day of the acquisition announcement? Specifically, what does the $2.17-billion gain in Berkshire’s market value of equity imply about the intrinsic value of PacifiCorp? May 24, 2005 marked the day of Warren Buffett’s (CEO of Berkshire Hathaway Inc.) largest acquisition since 1998. On this day it was announced that the electric utility company PacifiCorp was going to be acquired by the Berkshire Hathaway subsidiary, MidAmerican Energy Holdings Company. PacifiCorp was purchased from their “parent” company Scottish Power plc.
D) triple witching. 5. The writer of a put A) accepts the obligation to sell a predetermined number of shares at a predetermined price. B) is betting the price of the underlying security will increase in value. C) is hoping that the put will be in-the-money prior to expiration.
Strength Serina VanCuren FIN/370 November 5, 2012 Jessica Tiedeberg Strength The advantages of going public through an IPO are; it will result in an increase in capital for the company. This will also place value on the company’s stock, and the consumers or insiders will be able to sell their stock or use it as collateral for larger loans and other financing needs (Lewis & Kappes, 2012) . Normally with an IPO a company’s debt-to-equity ratio will improve after the first offering t the public. When acquiring another organization within the same industry can have its own strengths. One of the main strengths this can have is to outdo your competition.