In Open Market Operations, the Federal Reserve Buys and Sells

question 181

True/False

In open market operations, the Federal Reserve buys and sells gold on the open market to preserve the value of the dollar.

---

Definitions:

Treasury Stock

Shares initially offered by a company and then purchased again by that company, lowering the volume of shares that are actively traded on the market.

Par Common Stock

The face value of common stock as stated in the corporate charter, which has no direct correlation to the market value.

Cost Method

An accounting method used for investments where the investment is recorded at its acquisition cost, without subsequent change for increases or decreases in market value.

Preferred Stock

A category of corporate ownership that has a priority over common stock in terms of asset and earnings claims, typically offering fixed dividend payments.