Which One of the Following Is NOT True

question 35

Multiple Choice

Which one of the following is NOT true?

• A) The difference between the price at which a commercial bank sells an asset to the central bank and the price it agrees to buy it back can be expressed as an annualized percentage of the selling price, and this is called the refinancing rate.
• B) Commercial banks may borrow from and lend to each other and the interest rate at which they do this is called the refinancing rate.
• C) In the UK the refinancing rate is known as the repo rate and in the USA it is referred to as the discount rate.
• D) If the central bank has bought some assets from a commercial bank with an agreement that the commercial bank will buy them back at a later date, then this would be called a repo.

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Definitions:

FIFO Assumption

The First-In, First-Out method is an accounting assumption used to manage inventory and cost of goods sold, assuming the first items placed into inventory are sold first.

Subsidiary Shares

Shares owned by a parent company in a subsidiary, representing a controlling interest in that subsidiary.

Common Shares

Shares of stock representing ownership in a company, giving holders voting rights and a share in the company’s profits through dividends.

Stockholders' Equity

The residual interest in the assets of an entity after deducting liabilities, representing ownership interest held by stockholders.