Do you agree or disagree with the statement? Explain your answer. When the Treasury of the United States issues bonds and sells them to the public to finance the deficit, the money supply remains unchanged because every dollar of money taken in by the Treasury goes right back into circulation through government spending. This is not true when the Fed sells bonds to the public.

Q: Why are U.S. Treasury bonds considered to be safe? O They are repaid from user fees. O They are…

A: A Treasury Bond is a short- or long-term financial instrument issued by the national government.…

Q: US treasury bonds carry the full faith and credit of the us government, there fore they are…

A: The treasury bond refers to the securities issued by the entity in consideration of generating…

Q: The Federal Reserve has the power to fix the min rate of interest that commercial banks may pay on…

A: Federal interest rate-Federal Reserve pays interest on bank's reserve balance, and it is a common…

Q: If reserves are scarce, how would the federal funds rate change (increase or decrease) if the Fed:…

A: Federal funds is referred as an excess reserves that are held by the financial institutions for over…

Q: Governments are prevented from borrowing unlimited funds through the enforcement of debt limits.…

A: Debt limit refers to the limit on the debt that a government can borrow. It shows the limits of…

Q: Consider the following two exclusive projects, A and B: Project A B B A None of the above Project A…

A: Net present value is capital budgeting technique used for making investment decisions.  It is…

Q: Which one of the following factor affects the movement of share price of banking stock in the…

A: The Central bank is a body that monitors the activities of the banking sector and controlled its…

Q: With emphasis on Ghana’s monetary system, explain the term inflation targeting. Hence, highlight the…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Sovereign debt (issued bonds) are typically considered as proxies for risk free. 1. Discuss the…

A: Public debt refers to the national debt of a country or sovereign state. Government bonds are also…

Q: refinancing rate

A: The refinancing rate refers to the interest rate which is required to be paid by the banks when they…

Q: assuming the government is selling a bond to fight COVID-19, and at the same time, ASHANTI…

A: The question is based on the concept of bond yield and preference of investors.

Q: The company's bank won't lend it any more money than it already has, and investment bankers have…

A: A covenant or Indenture is a type of undertaking accepted by an issuer to restrain from doing…

Q: Banks with no foreign assets or liabilities are not exposed to foreign currency risk. True or False?…

A: Risk  The uncertainties related to investing are known as the risk.  Risk is present in every type…

Q: What is the primary function of the Federal Reserve in the United States? a) Fiscal policy b)…

A: The Federal Reserve System looks after the financial activities and operations of the banking…

Q: Which of the following is NOT true?       swaps (CDS) and collateralized debt obligations…

A: Usually, the rates of any reserves for the banks and financial institutions are fixed for every bank…

Q: The main difference between the Federal Reserve in the US and other central banks is that the Fed is…

A: A central bank refers to a financial institution that has privileged control over the production of…

Q: In a public corporation, the agency conflict is: O the exploitation of the workers by the owners the…

A: Agency Conflict refers to Conflict between the agents and owners of the company  Agents refers to…

Q: 1.On November 28, 1990, Federal Reserve Chairman Alan Greenspan told the House Banking Committee…

A: Mr Greenspan who was chairman Federal Reserve bank was very important and he indicated that he…

Q: Which of the following is most true?   The nominal rate of a government long-term security can be…

A: Risk free rate is the theroetical rate of return on the invested amount and security and it is…

Q: How does the creation of a Treasury STRIP help the government raise cash? Seleccione una: a. It does…

A: The separation of interest and principal amount on security and trading is also done separately then…

Q: The company's bank won't lend it any more money than it already has, and investment bankers have…

A: Sinking fund is a type of fund created for repayment of debt. The owner set aside some amount…

Q: The National Bank of Kazakhstan charges a discount interest rate on emergency loans to commercial…

A: The National Bank of Kazakhstan (NBK) is the central bank of the country that regulates the monetary…

Q: Sort each of the following by their likely impact on U.S. Treasury bond yields. Items (4 items)…

A: Bond yields and risk are inversely related. When the perceived risk of an investment increases,…

Q: Which of the following statements is (are) NOT directly related to moral hazard? 1. The use of loan…

A: Moral hazard is referred as the situation, where one party used to get involved in the risky event,…

Q: Which of the following statements is INCORRECT? Select one: а.

A: The answer is given below:

Q: The so-called “dual monetary policy mandate” of the Federal Reserve calls for setting conditions…

A: Federal reserve's monetary policy is aimed at bringing stability and such decisions are taken at…

Q: Conside the following shocks to the bond market: (A) an increase in perceived risk, (B) an…

A: Bond Market and perceived risk: When the perceived risk goes up in the economy the bond yields shoot…

Q: Treasury bonds carry high default risk because government has the option not to pay its…

A: Treasury bonds are risk free bond that are issued by the government of the country like US  Fed.…

Q: Are government bonds ALWAYS less risky than corporate bonds? If yes, please explain. If no, please…

A: Government bonds are secured by government while corporate bonds are backed by corporate.

Q: STRIPS are:   a) Government-backed schemes that allow investors to hedge against market risk.…

A: STRIPS (Separate Trading of Registered Interest and Principal Securities) was established to give…

Q: The prime interest rate Multiple Choice is lower than the federal funds rate because it is the rate…

A: PRIME RATE: It is lending rate used by banks at which they lend to customers.

Q: Decide whether the following statement makes sense​ (or is clearly​ true) or does not make sense​…

A: The correct answer is “Statement A”.

Q: The investment risk of U.S. government and corporate bonds has become less of an issue over time as…

A: Bonds are the debt security which is offered or issued by the corporates or the governments to…

Q: How does fractional-reserve banking influence the money supply in the United States?…

A: Fractional-reserve banking is a banking practice which allows the bank to expand the money supply .…

Q: d) State True or False for each of the following statements (: o Every financial market allows loans…

A: Answer: True. Every financial market allows loans to be made because it is one of the basic…

Regulation of Commercial Banks

The main function of any commercial bank is accepting deposits and lending money to borrowers. Apart from these two activities, commercial banks provide a host of other services to their customers, like discounting bills of exchange, acting as a custodian of a customer's will, and so on. In the absence of a proper regulatory framework or proper regulations in place, the commercial banks would have ended up charging exorbitant or varied rates of interest or service charges on the funds loaned by them or the services performed by them.