20. Suppose that before any forward guidance was given a bank believed the FFR would have the values shown in the table below but that with forward guidance it now expects lower rates. Year before guidance w/ forward guidance 1 0% 0% 2 3% 0% 3 5% 0% I How much lower is the average FFR with forward guidance in this example? (Give your answer as a decimal, so if it changed from 5% to 3% you would enter 0.02)
20. Suppose that before any forward guidance was given a bank believed the FFR would have the values shown in the table below but that with forward guidance it now expects lower rates. Year before guidance w/ forward guidance 1 0% 0% 2 3% 0% 3 5% 0% I How much lower is the average FFR with forward guidance in this example? (Give your answer as a decimal, so if it changed from 5% to 3% you would enter 0.02)
Chapter12: Sequences, Series And Binomial Theorem
Section12.3: Geometric Sequences And Series
Problem 12.58TI: What is the total effect on the economy of a government tax rebate of $500 to each household in...
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Transcribed Image Text:20. Suppose that before any forward guidance was given a bank believed the FFR would have the values
shown in the table below but that with forward guidance it now expects lower rates.
Year before guidance
w/ forward guidance
1
0%
0%
2
3%
0%
3
5%
0%
I
How much lower is the average FFR with forward guidance in this example? (Give your answer as a decimal,
so if it changed from 5% to 3% you would enter 0.02)
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