Which of the Following Best Describes the Outcome of a Decrease

question 75

Multiple Choice

Which of the following best describes the outcome of a decrease in the bank rate?

• A)Banks will borrow less from Bank of Canada, so reserves increase.
• B)Banks will borrow less from Bank of Canada, so reserves decrease.
• C)Banks will borrow more from Bank of Canada, so reserves increase.
• D)Banks will borrow more from Bank of Canada, so reserves decrease.

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Definitions:

Annual Net Cash Flows

Annual net cash flows represent the amount of cash a company generates or loses within a year from its operating, investing, and financing activities.

Required Return

The minimum amount of profit or gain an investor expects to achieve from an investment to make it worthwhile.

Net Present Value Method

A financial modeling technique that evaluates the profitability of an investment by discounting future cash flows to their present value and subtracting the initial investment.

Cash Flows

The total amount of money being transferred into and out of a business, often analyzed to assess the financial health of an organization.