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Suppose on Any Given Day the Prevailing Equilibrium Federal Funds

question 75

Multiple Choice

Suppose on any given day the prevailing equilibrium federal funds rate is below the Federal Reserve's federal funds target rate. If the Federal Reserve wishes for the federal funds rate to be at their target level,then the appropriate action for the Federal Reserve to take is a ________ open market ________,everything else held constant.


Definitions:

Coupon Rate

The annual interest rate paid on a bond's face value to its holders, expressed as a percentage of the face value.

Duration

Measures the sensitivity of a bond's price to changes in interest rates, calculated as a weighted average of the times until the bond's cash flows are received.

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date, including all interest payments and the repayment of principal.

Coupon Rate

The interest rate that a bond issuer will pay to a bondholder, typically expressed as an annual percentage of the bond's face value.

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