1. To raise money through a repurchase agreement what does a bank need to have? A....

1. To raise money through a repurchase agreement what does a bank need to have?

		A. Marketable securities
		B. Adequate equity capital
		C. Savings accounts

2. The federal funds market is best described as:

		A. a market for U. S. Treasury securities.
		B. a market for interbank borrowing and lending.

3. As of Dec 2019 the market cap of Bank of America was:

		A. less than the book value of equity.
		B. greater than the book value of equity.

Solutions

Expert Solution

Answers-

Q 1)

The correct Option is B. Adequate equity capital
A repurchase agreement is agreement of sale or purchase for securities of fixed income instruments with a commitment to buy back or sell these instruments on a future date for a prespecified price.

The Option A and C is incorrect.
Option A may be useful when the bank sells securities but is not sufficient.
Option C is incorrect.

Q 2)

The correct Option is B.

The federal funds market is best described as a market for interbank borrowing and lending excess reserves. It is done on an overnight basis.
The Option A is described as the UF Fed reserve which sells and buy U. S Treasury securities.

Q 3)

The correct Option is B. Market cap of Bank of America was greater than the book value of equity.

As of Dec 31st 2019 the Market cap of Bank of America was $ 316.8 billions

The value for 31 st Dec 2019 the Book value of equity was $ 241.41 billions.

jeff jeffy answered 1 year ago

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