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What circumstances would it be advisable to borrow money to take a cash discount?
Wiki User
∙ 13y ago
It is advisable to borrow in order to take a cash discount when the cost of borrowing is less than the cost of foregoing the discount. If it cost us 36 percent to miss a discount, we would be much better off finding an alternate source of funds for 8 to 10 percent.
Wiki User
∙ 13y ago
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Question 22 text When banks borrow money from the Fed they reduce the money supply?
yes
What is the difference between a discount sales tax and a tip in relation to the total cost?
A discount is money off a product, a sales tax is money added to the price of a product, and a tip is money given to someone fr good service.
What is the difference between discount and loss?
hi I'm Nivedita.the difference between discount and loss is discount is the reduced price whereas loss means the amount of money lost from the c.p.
If you are buying something for 18.50 and you get a 50 percent discount how much money did you save?
You saved 9.25.
How does the money supply expand?
Central banks control the money supply. In the U.S. the central bank is the Federal Reserve.The Federal Reserve (Fed) has 3 main tools at its disposal to manage the money supply. They are i) the discount rate; ii) the reserve requirement; and iii) open market operations.The discount rate is the interest rate that federal reserve banks charge to qualified private lending institutions for overnight loans accessed from the "discount window". The higher the rate, the less inclined private banks are to borrow. Thus, a higher discount rate constricts the money supply and a lower discount rate expands the money supply.The reserve requirement is the level of funds that a depository institution must hold against specified liabilities. This relates to the whole idea of fractional reserve banking. That is, we expect that banks will make loans from their deposits but they should hold adequate reserves to meet withdrawal requests. A lower reserve requirement expands the money supply.Finally, open market operations relate primarily to the Fed's activity buying and selling US Treasury obligations. The most active markets are in 2-, 5-, and 10-year notes. When the Fed sells bonds for US dollars, dollars are coming out of the system, thus constricting the money supply. When the Fed buys bonds on the open market with US dollars, this injects new dollars into the market, thus expanding the money supply.There are more complicated topics related to your question that you may be interested in reading about, including: Capital Adequacy, the Velocity of Money, Fed guarantee programs.
Under what circumstances would it be advisable to borrow money to take a cash discount?
Under what circumstances would it be advisable to borrow money to take a cash discount?
Under what circumstance would it be advisable to borrow money to take a cash discount?
Under what circumstances would it be advisable to borrow money to take a cash discount
What best explains why raising the discount rate affects the money supply?
When the discount rate is high, banks keep more reserves on hand to avoid paying a lot to borrow from the Fed... Apex :)When the discount rate is high, banks keep more reserves on hand to avoid paying a lot to borrow from the Fed.
What is the meaning of circumstances?
Your economic circumstances is very good if you have a well paid job, and are able to pay all your bills, and save for a rainy day.Your economic circumstances is very poor if you are jobless, unable to pay your bills, and have had to borrow money to get by.
What is the meaning of economic circumstances?
Your economic circumstances is very good if you have a well paid job, and are able to pay all your bills, and save for a rainy day.Your economic circumstances is very poor if you are jobless, unable to pay your bills, and have had to borrow money to get by.
Can I borrow money from a lawyer?
Well, you can borrow money from anyone if they agree to loan it to you.
Can you borrow money from your pension plan?
Can you borrow against money from your pension plan?
Why do farmers borrow money from the money lenders?
farmers have to borrow money to purchase seeds,fertilizers and pesticides.
When you buy U.S. government savings bond your doing so under the power given to the congress to?
The power that is given to congress is the ability to borrow money.
The best time for people to borrow money is when?
this is from social studies.the best time for people to borrow money is when
When you borrow money do you incur debt savings budgets or assets?
When you borrow money you incur debt.
Can states borrow money?
yes. states can borrow money from citizens through government bonds
