International Finance And Treasury - Study Mode

[#626] Submitted bids in treasury bills auction consists of types which are
Correct Answer

(D) both a and b

Explanation

Solution: Submitted bids in treasury bills auction consists of types which are competitive bids and non-competitive bids. Treasury delivers securities to bidders who were awarded securities in a particular auction. In exchange, Treasury charges the accounts of those bidders for payment of the securities. Treasury bills are issued at a discount or at par (face amount) and are paid at par at maturity.

[#627] The type of market in which Eurodollar are traded is classified as
Correct Answer

(D) Eurodollar market

Explanation

Solution: The type of market in which Eurodollar are traded is classified as Eurodollar market. The term eurodollar refers to U.S. dollar-denominated deposits at foreign banks or at the overseas branches of American banks. Because they are held outside the United States, eurodollars are not subject to regulation by the Federal Reserve Board, including reserve requirements.

[#628] Interest rate paid on traded Eurodollars is called as
Correct Answer

(B) London interbank offered rate

Explanation

Solution: Interest rate paid on traded Eurodollars is called as London interbank offered rate. The London Interbank Offered Rate is the average interest rate at which leading banks borrow funds from other banks in the London market.

[#629] Interest rate of certificate of deposits is quoted using a time span of
Correct Answer

(D) 360 day a year

Explanation

Solution: Interest rate of certificate of deposits is quoted using a time span of 360 day a year. A certificate of deposit (CD) is a product offered by banks and credit unions that offers an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time.

[#630] Non-competitive bidders get allocation of treasury bills on
Correct Answer

(D) preferential basis

Explanation

Solution: Non-competitive bidders get allocation of treasury bills on preferential basis. Treasury Bills, also known as T-bills are the short-term money market instrument, issued by the central bank on behalf of the government to curb temporary liquidity shortfalls.