Provide an Appropriate Response

question 2

Essay

Provide an appropriate response.
-Use

Evaluate the market value of a firm based on its assets and liabilities.

Calculate shareholders' equity based on company's assets and liabilities.

Understand and calculate key financial metrics such as net income, dividends, and interest expenses.

Analyze and interpret the significance of current assets, working capital, and cash flow statements.

---

Definitions:

Required Reserve Ratio

The proportion of deposits that banks are required to hold in reserve and not lend out.

Required Reserve Ratio

The fraction of deposits that banks must hold in reserve, either in their vaults or with the central bank, to ensure bank liquidity.

Federal Funds Market

A financial market that allows banks to borrow or lend excess reserves to one another, usually on an overnight basis.

Liquidity

The simplicity of transforming an asset into cash without impacting its market value.