The Term "Open Market Operations" Refers to the

question 47

Multiple Choice

The term "open market operations" refers to the

• A) loan-making activities of commercial banks.
• B) effect of expansionary monetary policy on interest rates.
• C) operation of competitive markets in the banking industry as the result of deregulation.
• D) buying and selling of government securities by the Federal Reserve.

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Definitions:

Net Present Value

A financial metric that calculates the present value of all cash flows (both incoming and outgoing) associated with an investment, adjusted for time and interest.

Internal Rate of Return

A financial metric used to evaluate the profitability of an investment, indicating the annual return that makes the net present value of all cash flows from a particular project equal to zero.

Cash Flows

The sum of cash flowing in and out of a company, particularly influencing its available cash assets.

Internal Rate of Return

The interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero.