You are the bank manager and currently the cash rate is very high. - You should...
You are the bank manager and currently the cash rate is very high.
- You should NOT own a relative large amount of ESF because you can borrow it on short notice cheaply.
- You should borrow a relative large amount of ESF now to be prepared for a liquidity shortage in the future.
- You should own a relative large amount of ESF and keep it on your ESA (exchange settlement account) in case of a liquidity shortage.
-You should own a relative large amount of ESF in case of a liquidity shortage, but lend it out to other banks to earn the cash rate.
Homework Answers
Answer:
You are the bank manager and currently the cash rate is very high.
- You should NOT own a relative large amount of ESF because you can borrow it on short notice cheaply.
cash rate is the rate at which central bank provides overnight credit to other banks
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You are the bank manager and currently the cash rate is very high. - You should...
QUESTION 4 Which of the following statements does describe the "cash rate" most accurately? The cash...
QUESTION 4 Which of the following statements does describe the "cash rate" most accurately? The cash rate is the interest rate that the RBA charges banks for unsecured overnight loans. The cash rate is the interest rate that banks charge each other for unsecured overnight loans The cash rate is the interest rate that the RBA charges banks for secured overnight loans. The cash rate is the interest rate that banks charge each other for secured overnight loans. QUESTION 5...
Multiple choice question QUESTION 4 Which of the following statements does describe the "cash rate" most...
Multiple choice question
QUESTION 4 Which of the following statements does describe the "cash rate" most accurately? The cash rate is the interest rate that the RBA charges banks for unsecured overnight loans. The cash rate is the interest rate that banks charge each other for unsecured overnight loans The cash rate is the interest rate that the RBA charges banks for secured overnight loans. The cash rate is the interest rate that banks charge each other for secured overnight...
Multiple choice question QUESTION 6 You are representing the RBA and noted that the cash rate...
Multiple choice question
QUESTION 6 You are representing the RBA and noted that the cash rate is higher than the RBA target cash rate. The RBA should buy bonds and thereby push more ESF into the banking system to reduce the pressure in the interb There is nothing that the RBA can do about this situation because the central bank is independent of the governmen The RBA should advise the banks to lend to each other at the agreed target...
You are representing the RBA and noted that the cash rate is higher than the RBA...
You are representing the RBA and noted that the cash rate is higher than the RBA target cash rate. - The RBA should advise the banks to lend to each other at the agreed target cash rate. - There is nothing that the RBA can do about this situation because the central bank is independent of the government. -The RBA should sell bonds and thereby push more ESF into the banking system to reduce the pressure in the interbank market....
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QUESTION 5 You are the bank's liquidity manager. What should you do if the RBA increased...
QUESTION 5 You are the bank's liquidity manager. What should you do if the RBA increased the cash rate (overnight interbank borrowing) and why? Answer this question by filling in the blanks. Please use the suitable word provided in the round brackets The risk of illiquidity (increased/decreased/did not change). The cost of illiquidity (increased/decreased/did not change). Therefore it makes sense to (increase/decrease/ maintain) the ESF buffer. As a result your bank will be willing to create (more/less/the same) loans and deposits.
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Please explain the working as well. Thank you Suppose that you are running a business and...
Please explain the working as well.
Thank you
Suppose that you are running a business and you need some extra space for one year. Your bank offers you a loan of $100,000 at 0% Interest. You consider borrowing this amount, buying the building, using it for one year, and then selling the building to pay back the loan. Unfortunately, the economy in which you are operating is experiendng deflation at the rate of 10% per year. After one year, you...
QUESTION 4 Which of the following statements does describe the "cash rate" most accurately? The cash rate is the interest rate that the RBA charges banks for unsecured overnight loans. The cash rate is the interest rate that banks charge each other for unsecured overnight loans The cash rate is the interest rate that the RBA charges banks for secured overnight loans. The cash rate is the interest rate that banks charge each other for secured overnight loans. QUESTION 5...
Multiple choice question
QUESTION 4 Which of the following statements does describe the "cash rate" most accurately? The cash rate is the interest rate that the RBA charges banks for unsecured overnight loans. The cash rate is the interest rate that banks charge each other for unsecured overnight loans The cash rate is the interest rate that the RBA charges banks for secured overnight loans. The cash rate is the interest rate that banks charge each other for secured overnight...
Multiple choice question
QUESTION 6 You are representing the RBA and noted that the cash rate is higher than the RBA target cash rate. The RBA should buy bonds and thereby push more ESF into the banking system to reduce the pressure in the interb There is nothing that the RBA can do about this situation because the central bank is independent of the governmen The RBA should advise the banks to lend to each other at the agreed target...
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You need 400,000 to buy a flat. So, you go to the bank and ask for that amount. The bank offers an annual interest rate of 3%, and the loan has to be paid back in 20 years, in constant monthly payments. Calculate how much you'll have to pay back to the bank every month (write the result with no decimal points) Answer: How much you should invest today in a financial product that offers a 5% interest rate (compounded...
Suppose that you are running a business, and you need some extra space for one year. Your bank offers you a loan of $200,000 at 0% Interest. You consider borrowing this amount to buy the building, use it for one year, and then sell the building to pay back the loan. Unfortunately, the economy in which you are operating is experiencing deflation at the rate of 10% per year. After one year, you should be able to sell the building...
Please explain the working as well.
Thank you
Suppose that you are running a business and you need some extra space for one year. Your bank offers you a loan of $100,000 at 0% Interest. You consider borrowing this amount, buying the building, using it for one year, and then selling the building to pay back the loan. Unfortunately, the economy in which you are operating is experiendng deflation at the rate of 10% per year. After one year, you...
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