Why did the New York Stock Exchange report prices in fractions before it switched to decimal reporting?

July 8, 2024 No Comments

A: Before April 9, 2001, when the Securities and Exchange Commission ordered all U.S. stock markets to switch to the decimal system, prices were reported and stocks were denominated in fractions—in one-sixteenths to be exact. While it seems silly that it took so long for the

Why do banks securitize some debts, and how do they sell them to investors?

July 8, 2024 No Comments

A: Banks may securitize debt for reasons that include risk management, balance sheet issues, greater leverage of capital and to profiting from origination fees. Debt is securitized by the pooling of certain types of debt instruments and then creating a new financial instrument from the

Which countries run the largest budget deficits?

July 8, 2024 No Comments

A: The countries with the largest budget deficits as of March 2015, in order, are Kuwait, Macau, the Republic of Congo, Norway, and Brunei. This is based on an examination of budget deficits as a percentage of gross domestic product (GDP), which puts all countries

Why do banks write off bad debt?

July 8, 2024 No Comments

A: Banks prefer to never have to write off bad debt since their loan portfolios are their primary assets and source of future revenue. However, toxic loans—loans that cannot be collected or are unreasonably difficult to collect—reflect very poorly on a bank’s financial statements and

Which economic factors most affect the demand for consumer goods?

July 8, 2024 No Comments

A: The consumer goods sector includes a wide range of retail products purchased by consumers, from staples such as food and clothing to luxury items such as jewelry and electronics. While overall demand for food is not likely to fluctuate wildly – although the specific

Why do commercial banks borrow from the Federal Reserve?

July 8, 2024 No Comments

A: Commercial banks borrow from the Federal Reserve primarily to meet reserve requirements when their cash on hand is low before the close of business. To put itself back over the minimum reserve threshold, a bank borrows money from the government’s central bank utilizing what

What role does the government play in capitalism?

July 8, 2024 No Comments

A: The proper role of government in a capitalist economic system has been hotly debated for centuries. Unlike socialism, communism or fascism, capitalism does not assume a role for a coercive, centralized public authority. While nearly all economic thinkers and policymakers argue in favor of

What strategies do companies employ to increase market share?

July 8, 2024 No Comments

A: Companies increase market share through innovation, strengthening customer relationships, smart hiring practices, and acquiring competitors. A company’s market share is the percentage it controls of the total market for its products and services. Market share is calculated by measuring the percentage of sales or

What types of consumer goods demonstrate the price elasticity of demand?

July 8, 2024 No Comments

A: All consumer goods are governed by the laws of supply and demand, so every type of consumer good “demonstrates” the price elasticity of demand. This does not mean the relationship between demand and price is equal across all types of consumer goods. For example,

What types of industries are the main consumers of the products of the chemicals sector?

July 8, 2024 No Comments

A: A variety of different industries use chemical products. Construction, automotive manufacturing and other industrial manufacturing operations require the use of chemicals. Many chemical companies process raw materials such as crude oil into more refined products that are used throughout industry. Approximately 80% of the

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