If the Treasury sells debt that is purchased by the Federal Reserve and uses the funds to
purchase military equipment, the excess reserves of the banking system are not affected.
If the “times-interest-earned” were 1.5, that implies the interest payments will not be
made.
The lessor depreciates the equipment while the lessee deducts the cost of the lease.
Compounding refers to the earning of interest on interest.
With straight-line depreciation, the book value of the asset is reduced by the same
amount each year.
Bonds never sell for a premium over their principal value.
The presidents of the District Banks elect the Board of Governors of the Federal
Reserve.
A convertible bond’s value fluctuates with the price of the stock into which the bond
may be converted.
The sum of a firm’s liabilities and equity equals the sum of its assets.
When individuals deposit cash in a demand deposit, the money supply is reduced.
The capital asset pricing model specifies the required return adjusted for systematic
risk.