As a "Central Bank," Which of the Following Is TRUE

question 110

Multiple Choice

As a "central bank," which of the following is TRUE regarding the Fed?
I. The Fed is a public authority that regulates the nation's banks.
II. The Fed is not allowed to provide services to commercial banks like Citibank.
III. The Fed is required to provide banking services to private citizens.

• A) I only
• B) II only
• C) I and II
• D) I and III

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Definitions:

Capital Asset Pricing Model

A model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Risk-Free Rate

The rate of return of an investment with zero risk, serving as a benchmark for evaluating other investments.

Discount Rate

The interest rate used to determine the present value of future cash flows.

Capital Projects

Long-term investment projects requiring significant sums of money to acquire, improve, or maintain physical assets.