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A solvent Australian bank which is about to run out of exchange settlement reserves, and which has left it too late to source liquidity on the money market, can borrow funds overnight from the Reserve Bank of Australia. Supposing the target cash rate to be currently 0.25%pa, what is the annualised interest-rate the commercial bank would have to pay the RBA? 1.25% 0% 0.50% 0.25% 0.10%

A solvent Australian bank which is about to run out of exchange settlement reserves, and which has left it too late to source liquidity on the money market, can borrow funds overnight from the Reserve Bank of Australia. Supposing the target cash rate to be currently 0.25%pa, what is the annualised interest-rate the commercial bank would have to pay the RBA? 1.25% 0% 0.50% 0.25% 0.10%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A solvent Australian bank which is about to run out of exchange settlement reserves, and which has left it too late to source liquidity on the money market, can borrow funds overnight from the Reserve Bank of Australia. Supposing the target cash rate to be currently 0.25%pa, what is the annualised interest-rate the commercial bank would have to pay the RBA? 1.25% 0% 0.50% 0.25% 0.10%
Transcribed Image Text:A solvent Australian bank which is about to run out of exchange settlement reserves, and which has left it too late to source liquidity on the money market, can borrow funds overnight from the Reserve Bank of Australia. Supposing the target cash rate to be currently 0.25%pa, what is the annualised interest-rate the commercial bank would have to pay the RBA? 1.25% 0% 0.50% 0.25% 0.10%
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