Ross Wants to Invest Some Money That He Just Inherited

question 286

Multiple Choice

Ross wants to invest some money that he just inherited.He found that his bank offers a savings account paying a guaranteed 3% rate of return.However,he would like to earn a higher return.Ross should keep in mind that to earn a higher return on his money he:

• A)will have to invest overseas.
• B)should invest in a business that has a very stable and predictable rate of return.
• C)will probably have to accept a higher level of risk.
• D)will probably have to engage in illegal activities.

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Definitions:

Monetary Control

Monetary Control involves the regulation of the money supply and interest rates by central banks to manage economic stability and growth.

Open Market Operations

The buying and selling of government securities by a central bank in order to control the money supply and influence interest rates.

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, central bank, or other governing body.

Actual Reserves

The amount of funds that a bank has on hand and available to lend, beyond its reserve requirements.