An Repo implies that the "lender" receives a security for the time of the "loan". Since...
An Repo implies that the "lender" receives a security for the time of the "loan". Since the RBA accepts only high quality securities, this makes the Repo risk-free.
- Because of the low risk, the RBA usually charges less than the interbank rate. The interbank rate is for unsecured and therefore more risky loans.
- Despite the low risk, the RBA usually charges more than the interbank rate because of the interest rate risk.
- Despite the low risk, the RBA usually charges more than the interbank rate because of the long duration of overnight loans.
- Despite the low risk, the RBA usually charges more than the interbank rate in order to deter banks from requesting an overnight ESF loan from the RBA.
Homework Answers
The Repo rate is usually less than the bank rate as the repo is relatively risk-free compared to the inter-bank lending transactions. Also, the inter-bank lending transactions involve a profit for the lender bank and hence is generally higher than the repo rate.
Ans: Because of the low risk, the RBA usually charges less than the interbank rate. The interbank rate is for unsecured and therefore more risky loans.
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An Repo implies that the "lender" receives a security for the time of the "loan". Since...
enide-5795 18lcourse_id 123132 18ic 10 p QUESTION 8 An Repo implies that the "lender" receives a...
enide-5795 18lcourse_id 123132 18ic 10 p QUESTION 8 An Repo implies that the "lender" receives a security for the time of the "loan" Since the RBA accepts only high quality securities, this makes the Repo risk-free. Because of the low risk, the RBA usually charges less than the interbank rate The interbank rate is for unsecured and therefore more risky loans. @ Despite the low risk, the RBA usually charges more than the interbank rate in order to deter banks...
enide-5795 18lcourse_id 123132 18ic 10 p QUESTION 8 An Repo implies that the "lender" receives a...
enide-5795 18lcourse_id 123132 18ic 10 p QUESTION 8 An Repo implies that the "lender" receives a security for the time of the "loan" Since the RBA accepts only high quality securities, this makes the Repo risk-free. Because of the low risk, the RBA usually charges less than the interbank rate The interbank rate is for unsecured and therefore more risky loans. @ Despite the low risk, the RBA usually charges more than the interbank rate in order to deter banks...
Multiple choice question QUESTION 8 An Repo implies that the "lender" receives a security for the...
Multiple choice question
QUESTION 8 An Repo implies that the "lender" receives a security for the time of the "loan". Since the RBA accepts only high quality securities, this makes the Repo risk-free. Despite the low risk, the RBA usually charges more than the interbank rate in order to deter banks from requesting an overnight ESF loan from the RBA. Because of the low risk, the RBA usually charges less than the interbank rate. The interbank rate is for unsecured...
QUESTION 8 An Repo implies that the "lender" receives a security for the time of the...
QUESTION 8 An Repo implies that the "lender" receives a security for the time of the "loan". Since the RBA accepts only high quality securities, this makes the Repo risk-free. Despite the low risk, the RBA usually charges more than the interbank rate because of the long duration of overnight loans. Despite the low risk, the RBA usually charges more than the interbank rate in order to deter banks from requesting an overnight ESF loan from the RBA Despite the...
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...
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 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...
Assignment : Imagine that a friend who knows you are working toward your degree in business...
Assignment : Imagine that a friend who knows you are working toward your degree in business administration is complaining about interest rates. Perhaps they think the rate they are getting on savings vehicles, like money markets, is too low, or the interest they are paying on their mortgage is too high. They conclude that it seems like no matter what they lose. 1) Respond to your friend's concerns. Be sure to be specific in supporting the points you are making...
1) A borrower who takes out a loan usually has better information about the potential returns...
1) A borrower who takes out a loan usually has better
information about the potential returns and risk of the investment
projects he plans to undertake than does the lender. This
inequality of information is called
A) moral hazard.
B) asymmetric information. C) noncollateralized risk. D)
adverse selection.
2) If bad credit risks are the ones who most actively seek
loans then financial intermediaries face the problem of
A) moral hazard.
B) adverse selection.
C) free-riding.
D) costly state verification....
tr8-Review Questions Chap 9- Review ques 17. Congress passed the Credit Card Accountability and Responsibility, and...
tr8-Review Questions Chap 9- Review ques 17. Congress passed the Credit Card Accountability and Responsibility, and Disclosure Act in order to: A) ame: strict the fees imposed on credit card users. redit card users to reduce the use of their credit cards. B) C) require the sto provide credit cards to students and other customers with a low income. D) prevent banks from imposing a fee when transferring a balance from another credit card. 18. If a bank has $50...
enide-5795 18lcourse_id 123132 18ic 10 p QUESTION 8 An Repo implies that the "lender" receives a security for the time of the "loan" Since the RBA accepts only high quality securities, this makes the Repo risk-free. Because of the low risk, the RBA usually charges less than the interbank rate The interbank rate is for unsecured and therefore more risky loans. @ Despite the low risk, the RBA usually charges more than the interbank rate in order to deter banks...
enide-5795 18lcourse_id 123132 18ic 10 p QUESTION 8 An Repo implies that the "lender" receives a security for the time of the "loan" Since the RBA accepts only high quality securities, this makes the Repo risk-free. Because of the low risk, the RBA usually charges less than the interbank rate The interbank rate is for unsecured and therefore more risky loans. @ Despite the low risk, the RBA usually charges more than the interbank rate in order to deter banks...
Multiple choice question
QUESTION 8 An Repo implies that the "lender" receives a security for the time of the "loan". Since the RBA accepts only high quality securities, this makes the Repo risk-free. Despite the low risk, the RBA usually charges more than the interbank rate in order to deter banks from requesting an overnight ESF loan from the RBA. Because of the low risk, the RBA usually charges less than the interbank rate. The interbank rate is for unsecured...
QUESTION 8 An Repo implies that the "lender" receives a security for the time of the "loan". Since the RBA accepts only high quality securities, this makes the Repo risk-free. Despite the low risk, the RBA usually charges more than the interbank rate because of the long duration of overnight loans. Despite the low risk, the RBA usually charges more than the interbank rate in order to deter banks from requesting an overnight ESF loan from the RBA Despite the...
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...
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 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...
Assignment : Imagine that a friend who knows you are working toward your degree in business administration is complaining about interest rates. Perhaps they think the rate they are getting on savings vehicles, like money markets, is too low, or the interest they are paying on their mortgage is too high. They conclude that it seems like no matter what they lose. 1) Respond to your friend's concerns. Be sure to be specific in supporting the points you are making...
1) A borrower who takes out a loan usually has better
information about the potential returns and risk of the investment
projects he plans to undertake than does the lender. This
inequality of information is called
A) moral hazard.
B) asymmetric information. C) noncollateralized risk. D)
adverse selection.
2) If bad credit risks are the ones who most actively seek
loans then financial intermediaries face the problem of
A) moral hazard.
B) adverse selection.
C) free-riding.
D) costly state verification....
tr8-Review Questions Chap 9- Review ques 17. Congress passed the Credit Card Accountability and Responsibility, and Disclosure Act in order to: A) ame: strict the fees imposed on credit card users. redit card users to reduce the use of their credit cards. B) C) require the sto provide credit cards to students and other customers with a low income. D) prevent banks from imposing a fee when transferring a balance from another credit card. 18. If a bank has $50...
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