International Finance And Treasury - Study Mode

[#171] Repurchase agreements having maturity of one week or lesser have denominations of
Correct Answer

(C) $25 million or more

Explanation

Solution: Repurchase agreements having maturity of one week or lesser have denominations of $25 million or more. A repurchase agreement (repo) is a form of short-term borrowing for dealers in government securities. In the case of a repo, a dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day.

[#172] Instrument used by Federal Reserve to smooth money supply and interest rates includes
Correct Answer

(B) repurchase agreements

Explanation

Solution: Instrument used by Federal Reserve to smooth money supply and interest rates includes repurchase agreements. A repurchase agreement (repo) is a form of short-term borrowing for dealers in government securities. In the case of a repo, a dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day.

[#173] For a particular security transaction, agreement is 'repo' with point of view of
Correct Answer

(A) security seller

Explanation

Solution: For a particular security transaction, agreement is 'repo' with point of view of security seller.

[#174] Accounting entry of institutions who lends federal funds to other institutions is as
Correct Answer

(B) assets on balance sheet

Explanation

Solution: Accounting entry of institutions who lends federal funds to other institutions is as assets on balance sheet. Federal funds are overnight borrowings between banks and other entities to maintain their bank reserves at the Federal Reserve. Banks keep reserves at Federal Reserve Banks to meet their reserve requirements and to clear financial transactions.

[#175] Rate which is used in major banks in United States as a rate for industrial and commercial loans is
Correct Answer

(B) London interbank offered rate

Explanation

Solution: Rate which is used in major banks in United States as a rate for industrial and commercial loans is 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.