An Increase in Currency in Circulation Would ____ M1 and ____

question 122

Multiple Choice

An increase in currency in circulation would ____ M1 and ____ M2.

• A)​increase; increase.
• B)​not change; increase.
• C)​decrease; decrease.
• D)​not change; decrease.

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Definitions:

Cost of Equity

The cost of equity represents the return a firm is expected to pay to its shareholders to compensate them for their investment risk.

DCF Model

DCF Model, or Discounted Cash Flow Model, is a valuation method used to estimate the value of an investment based on its expected future cash flows.

Risk Premium

The extra return expected by investors for taking on additional risk above the risk-free rate.

Cost of Capital

The minimum return needed for a capital investment project, like constructing a new manufacturing facility, to be considered viable.