Why is it useful to make a distinction between debt and equity instruments?
What will be an ideal response?
Debt instruments such as bonds and bank deposits are repaid regardless of economic circumstances. Equity instruments, like a share of stock, have a payoff that is linked to economic performances. However, remember the possibility of bankruptcy and the real return, which is subject to domestic currency fluctuations.
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The required reserve ratio is 10 percent and Charlie deposits $3,000 in her checking account. The bank must
A) decrease reserves by $300. B) decrease reserves by $3,000. C) increase reserves by $3,000. D) increase reserves by $300. E) not change its reserves until Charlie decides to withdraw her funds.
Four candidates are running for president of their book club, which has a total of 36 members. The table below indicates the number of voters and their preferences
Determine the winner under the plurality-rule method, the Borda-count method (assigning 3 points to each first choice, 2 points to each second choice, 1 point to each third choice, and no points to each fourth choice), and the instant runoff method. Number of voters and their preferences 7 14 6 9 1st Choice Amy Byron Coco Dinesh 2nd Choice Coco Dinesh Amy Amy 3rd Choice Byron Amy Dinesh Coco 4th Choice Dinesh Coco Byron Byron
If autonomous consumption is equal to $80, then when income is zero, saving is
a. $0 b. –$20 c. –$80 d. $20 e. $80
If a bank keeps some of its excess reserves, the money multiplier:
A. increases. B. stays the same. C. goes to zero. D. decreases.