Why is the Overnight Reverse Repurchase rate (ON RRP rate) the actual price floor in the Federal Funds market?

Q: If there is inflation how does this affect LIFO reserves? Does it increase or decrease it?

A: LIFO Last-in-first out is a method used to issue material. It is a method of pricing the issues of…

Q: How has financial market integration affected interest rate movements?

A: Financial market integration is associated with the financial market being closely linked with…

Q: What would cause the annual interest rate to be different from the annual effective rate or yield?

A: Effective Interest Rate: The fixed rate applied to carrying value of the bonds to calculate the…

Q: rence rat

A: Introduction :  In simple words, Reference rate can be understood as the rate that is utilized to…

Q: How does inflation rate affect exchange rate?

A: Foreign Exchange Rate is the exchange rate at which the currency of one country exchanges with…

Q: Federal Reserve impact on inflation, growth and exchange rates: What happens to inflation, growth…

A: The Federal Reserve is America's central bank which is responsible for controlling demand and supply…

Q: Please select whether the following statements are true or false. As long as the discount rate is…

A: The federal funds are the excess funds of the commercial banks and other financial institutions that…

Q: The relationship between project cash flows, taxes and inflation.

A: Cash flows is the flow of money in or out from the business. There are two types of cash flows which…

Q: How should inflation expectations be included in analysis of capital projects?

A: Inflation expectations should be included in the analysis of capital projects by factoring in the…

Q: How do risk and inflation impact interest rates in the economy?

A: Introduction: The inflation needs to be adjusted in the interest rate of mortgage payments. Due to…

Q: Explain the interest rate sensitivity of government debt as a function of: i) its maturity and ii)…

A: Financing price affectability may be a proportion of what quantity the value of a fixed-pay resource…

Q: direct and indirect relationships between balance of payment and inflation rate.

A:

Q: What is the current market view on USD/JPY? (Will it appreciate and which depreciate? and why?)

A: USD/JPY will be reflecting the exchange rate of Japanese currency with respect to 1 American dollar.…

Q: How do investors deal with inflation when they determine interest rates in the financial markets?

A: Introduction: Inflation is an increase in the overall level of prices of products in the economy…

Q: please use a specific example to compare what is the discount rate% and what is the investment rate…

A: Explanation:-   Discount rate % on treasury bills: The income generated on the T-bill is equal to…

Q: How does the Liquidity Premium Theory influence the market interest rate?

A: Liquidity is the ability of a financial asset or security to convert into cash at market fair value.…

Q: What is a federal budget deficit or surplus? How does this affectinterest rates?

A: The question is based on the concept of federal budget position and its impact on the prevailing…

Q: Is the risk-free rate the Treasury yield?

A: The risk-free rate refers to the rate of return on an investment that is having zero risk of loss.…

Q: What are the primary risk of trading in the fed funds markets?

A: Fed funds are short-term funds that move between different financial institutions. Generally  the…

Q: How will a decrease in time preferences affect the loanable funds market?   A.   There will be an…

A: Decrease in time preferences tells us that individuals in the economy are more patient and more…

Q: Which of the following is the risk due to inflation?      Business risk     Financial risk…

A: In the dynamic landscape of finance and investments, one risk looms large, silently eroding the…

Q: What advantage does hedging using money market rates have over using interest rate futures?

A: However, there are also some drawbacks to consider:Potential Lower Returns: Interest earned on money…

Q: What are the effects of Borrowing on Project Cash Flows?

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Q: Expansionary monetary policy is aimed at ________ the federal funds rate and ________ the aggregate…

A: The basic purpose of expansionary policy is to raise aggregate demand for meeting the shortfalls…

Q: How can we determine the Net Present-Worth Amounts at Varying Interest Rates?

A: Answer: Net present worth is an estimation method applied to various time intervals when cash flows…

Q: What is the Relationship between Changes in Interest Rates, Investor Returns, and “Going-In”Cap…

A: The question is based on the concept of relation between change in interest rate and its impact on…

Q: Are there money market instruments traded overnight?

A: Money market instruments are highly liquid and have a maturity of less than 1 year. The risk…

Q: What is the purpose and workings of the Monetary policy transmission mechanism (MPTM)? What are the…

A: Monetary transmission technique or the mechanism is referred to as the process through which the…

Q: Conducting monetary policy so that the FF rate = 1.25%, where the FF rate is the nominal federal…

A: The main goal of central banks of any country is to provide price stability to the currency of the…

Q: Which capital budgeting technique defines returns in terms of income instead of cash flows? 4 a) The…

A: Payback Period, IRR and Net Present Value is calculated using annual net cash inflows. And…

Q: For the cost of equity (stock) is it better to use the current US Treasury bill rate or a…

A: For a debt commitment to be called entirely risk-free, investors must have perfect assurance that…

Q: When is a project in Need for an External Interest Rate?

A: When net cash flow that is generated by the project during the project’s life is reinvested, then…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.