When the Fed Makes a Discount Loan, the Impact on the Fed's

question 78

Multiple Choice

When the Fed makes a discount loan, the impact on the Fed's balance sheet will reflect:

• A) no change in liabilities but an increase in assets.
• B) a decrease in assets and liabilities.
• C) an increase in assets and liabilities.
• D) an increase in assets and a decrease in liabilities.

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholders from its earnings in the form of cash.

Bond Restriction

Conditions or covenants included in a bond agreement that impose certain limitations on the issuer's actions.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations using its current assets.

Pension Plans

Financial programs set up to provide income to individuals during retirement, usually funded by employers or the government.