On 23 April 2022, the closing price of the May 2022 30-day interbank cash rate contract was 98.11. The Reserve Bank of Australia (RBA) had a board meeting scheduled for 3 May 2022 and the current overnight cash rate was 2 per cent per annum. On 23 April, what was the probability implied by the price of the May 2022 30-day interbank cash rate contract that the RBA would decrease the cash rate to 2 per cent at its May meeting? Do not include the percentage symbol. For example 10% should be written as '10' in the answer box.

On 23 April 2022, the closing price of the May 2022 30-day interbank cash rate contract was 98.11. The Reserve Bank of Australia (RBA) had a board meeting scheduled for 3 May 2022 and the current overnight cash rate was 2 per cent per annum. On 23 April, what was the probability implied by the price of the May 2022 30-day interbank cash rate contract that the RBA would decrease the cash rate to 2 per cent at its May meeting? Do not include the percentage symbol. For example 10% should be written as '10' in the answer box.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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