The Bank of Canada (BoC) operating bands for the overnight rate is at 1 %:The Bank Rate, (The rate BoC Charges) is: Number %The Target for The Overnight Rate. (The rate Banks charge each other) is : 1%Deposit Rate. (The rate BoC pays) is: Number %Suppose the economy is experiencing a very high rate of unemployment, The Bank of Canada mustClick for Listto fight inflationDecrease Target Overnight RateIncrease the Target Overnight RateIncrease the Fiscal policyDecrease the Bank Rate

The correct Answer is : Decrease the Bank Rate

Answered: The Bank of Canada (BOC) operating…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

. Which of the following bank accounts has the highest effective annual return? An account that pays 6% nominal interest with annual compounding. An account that pays 5% nominal interest with monthly compounding. An account that pays 6% nominal interest with daily (365-day) compounding. An account that pays 6% nominal interest with monthly compounding. An account that pays 5% nominal interest with daily (365-day) compounding.
K The treasurer of a credit union proposes changing the method of compounding interest on premium savings accounts to semi-annual compounding. If the current rate is 7.4% compounded daily, what nominal rate should the treasurer suggest to the board of directors to maintain the same effective rate of interest? The new nominal rate of interest should be%. (Round the final answer to four decimal places as needed. Round all intermediate values to six decimal places as needed.)
Treasury bills are currently paying 6 percent and the inflation rate is 3.30 percent. What is the approximate real rate of interest? (Round your answer to 2 decimal places. (e.g., 32.16)) Approximate real rate %
Which of the following bank accounts has the lowest effective annual return? a. An account that pays 7% nominal interest with daily (365-day) compounding. b. An account that pays 7% nominal interest with monthly compounding. c. An account that pays 8% nominal interest with daily (365-day) compounding. d. An account that pays 8% nominal interest with annual compounding. e. An account that pays 8% nominal interest with monthly compounding.
Bank A expects the New Zealand dollar (NZ$) is going to appreciate in the next five days from $0.48 to $0.50, and the following annual interest rates are: Currency Lending Rate Borrowing Rate Dollars 7.10% 7.50% New Zealand dollar (NZ$) 6.80% 7.25% Bank A has the capacity to borrow either NZ$10 million or $5 million. If the bank's expectation is correct, the dollar profit can be generated over the five-day period is ___________. A. $134,862 B. $491,225 C. $503,320 D. $208,044
A commercial bank estimates that its fixed rate assets are earning an average interest income of 10%, while its variable rate liabilities are forecast to pay the interest rates below: End of Year 0 1 2 3 4 5 LIBOR 7% 8% 12% 13% 11% Interest Rate Ceiling 10% 10% 10% 10% 10% Suppose it sets up an interest rate ceiling arrangement with another financial institution at 10%. Assuming a notional amount of $50,000,000 and using the LIBOR forecast for each year to discount back the payments incurred, what would be the present value of these payments?
On its savings accounts, the First National Bank offers a 5 percent nominal interest rate that is compounded monthly. Savings accounts at the Second National Bank have the same effective annual return, but interest is compounded quarterly. What nominal rate does the Second National Bank offer on its savings accounts? a. 5.12% b. 5.00% c. 5.02% d. 1.28% e. 5.22%
None
AMRO Financials is quite certain that interest rates are going to decrease next month. How should the bank manager adjust the bank’s one-month repricing gap to increase the net interest income when interest rates decrease The bank should set its repricing gap to a positive position. In this case, as rates decrease, interest income will decrease by less than the decrease in interest expense. The bank should set its repricing gap to a negative position. In this case, as rates decrease, interest expense will decrease by more than the decrease in interest income. The bank should set its repricing gap to a positive position. In this case, as rates decrease, market value of assets will increase by more than the increase in market value of liabilities. The bank should set its repricing gap to a negative position. In this case, as rates decrease, market value of assets will increase by more than the increase in market value of liabilities.
The bank is paying 11.29% compounded annually. The inflation is expected to be 12.22% per year. What is the market interest rate? Enter your answer as percentage, without the % sign. Provide 2 decimal places. For example, if 12.34%, enter: 12.34
Suppose it is the end of May. Suppose the following sterling interest rates are currently available:Term % Sterling rate1 month 5.00-5.152 months 5.15-5.253 months 5.25-5.354 months 5.35-5.40A corporate Treasurer is expecting £1m in 1 month’s time which she wants to deposit for 3 months. How does she hedge her position against a fall in the deposit rate in 1 month’s time using the money market rates above?

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