Suppose that a bank has $500 million in asset X, $400 million in asset Y, and $200 million in asset Z. Each asset has a different risk weight. The risk weight for asset X is 40%, the risk weight for asset Y is 70%, and asset Z has zero risk. The amount of risk-weighted assets for this bank is ____________ million. Assuming that the bank has to hold capital equal to 8% of its risk-weighted assets,
the bank must hold _____________ million in capital.
A) $480; $38.4
B) $1,100; $88
C) $1,100; $880
D) $340; $27.2
A
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Refer to Edgeworth Box Economy. In an Edgeworth box, points within the region of mutual advantage represent allocations that
a. can be achieved by a competitive market. b. both consumers prefer to the initial endowment. c. exhaust the potential gains from trade. d. are Pareto optimal.
After running a promotional campaign, the owners of a local shoe store decided to decrease the prices for the shoes sold in their store. One can imply that
a. The promotional expenditures made the demand for their shoes more elastic b. The promotional expenditures made the demand for their shoes more inelastic c. The promotional expenditures has no effect on the shoe demand elasticity d. The owners got it wrong. To cover the promotional expenses, they should have raised the prices.
Suppose you paid $500,000 for an asset. You hold the asset for five years. The interest rate that you get for the asset is 10%. Assume the tax rate on capital gains is 20%.
(A) If capital gains are taxed only when the asset is realized, how much will you have earned on the asset? (B) Suppose that capital gains are taxed annually instead of at realization. How much will you have earned on the asset? (C) How big is the difference in the two taxing schemes?
One advantage of emissions permits is that they allow the government to choose the level of pollution reduction.
Answer the following statement true (T) or false (F)