Which of the Following Statements About the Federal Reserve System

question 42

Multiple Choice

Which of the following statements about the Federal Reserve System (the Fed) is correct?

• A) The Fed was established by George Washington and Alexander Hamilton in 1793.
• B) Congress created the Fed in 1913.
• C) The Fed was established in 1933, during the famous "Hundred Days" of the New Deal.
• D) Richard Nixon established the Fed in 1969 as an attempt to gain more White House control over monetary policy.

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Definitions:

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal, usually on an annual basis.

Optimal Capital Structure

The ideal mix of debt and equity financing that minimizes a company's cost of capital and maximizes its value and stock price.

WACC

Weighted Average Cost of Capital, a calculation of a firm's cost of capital that weighs each category of capital proportionately.

EPS

EPS stands for Earnings Per Share, a key financial indicator that divides net earnings available to shareholders by the average outstanding shares, illustrating the company's profit on a per-share basis.