Which Statement Is False Regarding Repurchase Agreements
Questions 1 to 10 are wrong. Rewrite each statement to make it true. This can be as simple as a word change or more complex. How are the rates for federal funds and pension transactions indicated? The Federal Reserve entered into a pension agreement with the Bank of Transylvania, in which the Fed purchased government bonds from the bank at a price of $9,967,500, which promised to buy back the securities 21 days later at a price of $10,000,000. What will be the return on the equivalent bond on the repo? Pension transactions have no risk of default or liquidity risk and are secured, so their return is the lowest of all money market securities. If an IF uses the Fed Funds market, it negotiates directly with the Federal Reserve via Fedwire. If T-Bills are initially offered or auctioned (primary market), what are the two maturities? . A T-bill with a face value of $1,000,000 and a maturity of 225 days currently has a discount return of 4.25 per cent. What is the market price of this T-bill and what is the equivalent rate of borrowing? Questions 11 to 14 are problems to be solved.
Please insert your work if you want a partial credit if the final answer is wrong. In other words, if you only write one answer number, it`s either right or wrong. The majority of money market securities are low unit and low-risk investments designed to target individual investors with excess liquidity. Most money market securities are first sold to individual investors. Converting the discount yield of a T-Bill to bond equivalent yield results in a decline in yield. What are the typical or common maturities of the following money market securities? Some money market stocks have active markets. In general, how are most exchanges arranged on the money market? One bank issued a 9-month, $4 million tradable CD with a reported annual interest rate of 0.67 percent. Remember that negotiable CDs are individual payment instruments. How much does the CD holder receive when he matures and what is the CD bond equivalent rate? There is a formula that you can write, but try to explain the procedure also in words.