An instrument for which a bank temporarily sells for liquidity a segment (amount) of its Treasury...

An instrument for which a bank temporarily sells for liquidity a segment (amount) of its Treasury securities with the expectation of buying them back is a(n): a. repurchase agreement b. negotiated CD (NCD) c. banker’s acceptance d. commercial paper

An instrument for which a bank guarantees payment on a post-dated three-party check usually used for international trade is a(n): a. repurchase agreement b. negotiated CD (NCD) c. banker’s acceptance d. commercial paper

Solutions

Expert Solution

Answer to 1st question

Answer:(a)Repurchase Agreement

A repurchase agreement is an instrument where a bank sells securities to gain liquidity with the guarantee to buy them back in a later date at a set price.A repurchase agreement maybe for a year or for a day.

other options explained

Negotiated certificate of deposit

False.Refers to the certificate issued by banks to investors upon making lump sum deposits.Such a certificate of deposit issued to an investor for deposits with minimum face value of $100,000 is called a Negotiable CD

Bankers Acceptance

False.A bankers acceptance refers to an instrument in which the bank guarantees payment and is often used in international trade.

Commercial paper

False.Commercial paper is used by firms to raise funds in the short run,they are unsecured(without collateral)

answer to Question 2

Answer:(C)Banker's Acceptance

Bankers Acceptance also known as bill of exchange refers to an instrument in which the bank guarantees payment, and is often used in international trade deals.

Other options explained

Repurchase Agreement

False.A repurchase agreement is an instrument where a bank sells securities to gain liquidity with the guarantee to buy them back in a later date at a set price.A repurchase agreement maybe for a year or for a day.

Negotiated CD

Commercial paper

False.Commercial paper is used by firms to raise funds in the short run , they are unsecured(without collateral)

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Consider an economy in which the central bank uses the interest rate as its policy instrument....

Consider an economy in which the central bank uses the interest rate as its policy instrument. The policy-makers judge that the unemployment rate is too high and decide to pursue expansionary monetary policy to raise the output level. a. Illustrate and explain how expansionary monetary policy is expected to raise the output level. How would components of aggregate demand be affected by this policy? b. What are the limitations of expansionary monetary policy? What are the options available to the...

15. An instrument issued by the bank for which a bank guarantees an interest rate over...

15. An instrument issued by the bank for which a bank guarantees an interest rate over a defined period of time negotiated with a large investor, that may then be traded on a secondary market is a(n): a. repurchase agreement b. negotiated CD (NCD) c. banker’s acceptance d. commercial paper 16. A short-term, unsecured, promissory note issued by prime rated firms is: a. repurchase agreement b. negotiated CD c. banker’s acceptance d. commercial paper 17. Among Thrift Institutions a. Savings...

Special Instrument company is considering replacing its machine with a new model that sells for $40,000,...

Special Instrument company is considering replacing its machine with a new model that sells for $40,000, the cost of installation is $6,000. The old machine has been fully depreciated and has a $2500 salvage value. The new machine will be depreciated as a 3-year MACRS asset. Revenues are expected to increase $18,000 per year over the 5-year life of the new machine. At the end of 5 years the new machine is expected to have a $1500 salvage value. What...

Assume that the Bank of England decided to reduce its purchases of U.S. treasury bonds and...

Assume that the Bank of England decided to reduce its purchases of U.S. treasury bonds and instead held more dollars on deposit at the Fed. How this will affect the monetary base? What would be the appropriate monetary policy action to offset such a change?

What are the major methods utilized by the bank industry to manage its liquidity risk? Why...

What are the major methods utilized by the bank industry to manage its liquidity risk? Why does bank generally prefer to use liability management to manage its liquidity problem?

You are the treasury manager for XYZ Bank and your company invests its idle cash in...

You are the treasury manager for XYZ Bank and your company invests its idle cash in short term securities. XYZ Bank CFO is looking for moderately risky securities with high levels of liquidity and return. You need to explain to the CFO and the board about suitable money market products for the company that will fit their liquidity needs. Give them four options and precisely explain why?

A recent listing for a treasury bill gave an asked bank discount yield of 2.31%. Its...

A recent listing for a treasury bill gave an asked bank discount yield of 2.31%. Its maturity was 50 days. a. What is the T-bill's coupon (bond) equivalent yield? b. What price would the bank pay for this T-bill? c. What is the effective annual yield (y*) for the T-bill? d. If the bid bank discount yield was 2.40%, what was the dealers spread in dollars on the bill assuming a ($100,000 par value)? Please show all work and steps...

Briefly explain the different ways bank can do its liquidity management. Explain with example.

Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from...

Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price of $24,995,000, with the promise to buy them back at a price of $25,000,000. a. Calculate the yield on the repo if it has a 7-day maturity. b. Calculate the yield on the repo if it has a 21-day maturity.

Suppose you depolarize an axon midway between its initial segment and its terminus. A. In which...

Suppose you depolarize an axon midway between its initial segment and its terminus. A. In which direction would the action potential travel? B. What would happen if you simultaneously excited an axon at two places: the initial segment and halfway down the axon towards its terminus?

Subjects